Critical Insights on the Gig Economy in Peninsular Malaysia: A Case Study Analysis
A recent report highlights that approximately four million individuals in Malaysia are engaged in the gig economy, representing over a quarter of the nation’s workforce, predominantly consisting of young adults aged 25 to 44. Budget reports from 2021 to 2023 have increasingly underscored the importance of the gig economy. A 2019 study by the Employees Provident Fund (EPF) projected that within five years, four out of ten Malaysian workers could be classified as gig workers, which is twice the global average. Additionally, a 2020 survey conducted by Zurich Insurance noted that more than two million gig workers had registered with the Malaysian Digital Economy Corporation.
The term “gig,” which initially referred to short-term engagements in the music industry, has evolved to encompass a wider range of informal employment arrangements, particularly amplified by the COVID-19 pandemic. Despite the growth of the gig economy, workers face considerable challenges, primarily due to their lack of recognition under labor laws, which denies them the social protections typically available to traditional employees. In response, the government has initiated programs such as the i-Saraan scheme and the Self-Employed Social Security Scheme to assist gig workers; however, participation in these voluntary schemes remains limited.
The gig economy spans various sectors, complicating regulatory oversight. For example, the transportation sector, which includes e-hailing and p-hailing services, falls under the jurisdiction of multiple governmental ministries, including human resources, transportation, communication, and finance. This study examines the challenges faced by gig workers in Peninsular Malaysia by conducting in-depth interviews with policymakers, legal practitioners specializing in employment law, rider associations, p-hailing drivers, and platform owners to explore existing issues.
Legal Status and Definitions of Employees Under Malaysian Law
The primary legislation governing employment in Malaysia is the Employment Act 1955 (EA 1955), which establishes the legal employment relationship based on a contract of service. This act defines a contract of service as an agreement between an employer and an individual willing to work for them, thereby creating an employer-employee relationship essential for legal acknowledgment under labor laws.
Recognizing employee status is crucial as it impacts statutory rights, protections, and claims concerning employment contracts. A landmark case, *Hoh Kiang Ngan v Mahkamah Perusahaan Malaysia & Anor [1996]*, reinforced that the degree of control an employer exercises over an individual serves as a determinant of employee status.
In October 2021, the Employment (Amendment) Bill 2021 was introduced to amend pivotal definitions within the EA 1955. Notably, it sought to presuppose employment in instances where no formal contract exists under specific conditions, thereby enhancing protections for workers.
Challenges Within the Gig Economy
The gig economy in Peninsular Malaysia is confronted with several systemic challenges, including ambiguous worker status, lack of social security, absence of formal employment contracts, inadequate pricing regulations, subpar operational services, and disjointed institutional frameworks. Addressing these challenges necessitates a comprehensive approach, incorporating precise definitions, improved social protections, fair employment practices, effective regulation, enhanced collaboration among stakeholders, and the creation of a robust institutional framework aimed at upholding the rights and welfare of gig workers.
This study presents findings and analyses concerning the obstacles faced by gig workers in Peninsular Malaysia, underscoring the urgency for structured policies and legislative reforms to protect their interests.
Author: Faizal Kurniawan
Details of the Article: Abdullah, N., Mohd Ismail, M., Huzni Murad, M. S., Jusoff, K., Kurniawan, F., & Salah, M. (2024). Critical Insights into Gig Economy: A Peninsular Malaysia Case Study. *Jambe Law Journal*, 7(2), 395–427.
