Gig workers now face of Malaysia’s labour force, says Khazanah Research Institute

KUALA LUMPUR, Nov 3 ― Independent work and digital economy has become the defining feature of Malaysia’s current labour landscape, said Khazanah Research Institute (KRI).

In its “Work in an Evolving Malaysia: The State of Households 2020 Part II” report, KRI described independent workers as those not engaged in traditional full-time positions with clear employment relations.

Such workers would include GrabFood delivery riders who are considered to be self-employed independent contractors.

“There are multiple permutations of this including the gig, contract, daily paid and self-employed workers.

“While these types of workers are not identical, they share similar risks (for example, higher income insecurity and inadequate social protection) and enjoy similar benefits (for example, greater autonomy and flexibility),” said KRI in its report.

However, there is no authoritative estimate of the number of “gig workers” in Malaysia.

According to KRI, part of the reason was that there was no single platform encompassing all types of gig work, which includes any “job of uncertain duration in any field, whether it’s a driver, a freelance artist or an interim CEO (chief executive officer)”.

“Nevertheless, while the actual number of gig workers in Malaysia remains unknown, growing numbers of gig workers on different platforms suggest that such work is fast growing,” said KRI.

It said gig workers were often also outside the existing regulatory framework, making them harder to identify and enumerate.

“For instance, unlike employees who have to be registered in the employment-related social protection schemes, or sole proprietors who have to register their businesses, existing schemes for gig workers are voluntary,” said KRI.

It added that, in the past five years, this employment status has seen the largest increase, fuelled by greater participation among youths and women in the country.

“Distinguishing employed individuals as either salaried or non-salaried, the World Bank estimated that non-salaried workers (ie the self-employed) in Malaysia account for 25.3 per cent of total employment or approximately 3.8 million people,” it said.

Not only in Malaysia, KRI said while richer countries tend to have fewer self-employed workers, the segment has either flattened or increased in recent years, suggesting that independent work is likely to remain prominent.

“This is coupled with the reported preference for self-employment among Malaysians, increasing internet user and the growth of young own account workers, suggest that independent work is here to stay,” said KRI.

Growing digital economy

In its report, KRI also found that the digital economy in Malaysia is also growing.

“The Department of Statistics (DOS) estimated that the digital economy contributed to 18.5 per cent of GDP (Gross Domestic Product) in 2018.

“Between 2015 and 2018, the greatest expansion occurred in e-commerce which rose 0.3 percentage points from 5.6 per cent to 5.9 per cent, against 0.1 percentage points from 12.5 per cent to 12.6 per cent for the Information and Communication Technology (ICT) industry.

“In 2019, eMarketer (eMarketer Malaysia) ranked Malaysia among the top 10 fastest growing e-commerce countries by online retail sales growth,” said KRI.

According to KRI, these positive market trends are consistent with the increasing number of internet users, high mobile subscriptions as well as changes in consumer behaviour.

“The high rate of mobile users is highlighted as Malaysian internet connectivity and usage have been primarily facilitated by increasing mobile phone use. Malaysians are also among the most engaged mobile internet users in the world (in terms of hours spent) in 2019,” KRI said referring to findings in its report.