This article first appeared in Digital Edge, The Edge Malaysia Weekly on February 26, 2024 - March 3, 2024

All over the world, the gig economy is emerging as an integral part of the labour market. According to the World Bank’s “Working Without Borders: The Promise and Peril of Online Gig Work” report published in September 2023, the number of global online gig workers ranges from 154 million to 435 million, representing 4.4% to 12.5% of the global labour force. The existence of 545 online gig platforms worldwide is a testament to the increasing demand for flexible, digitally-­enabled work arrangements.

In Malaysia, this shift is equally pronounced. The local gig economy is valued at RM1.33 billion, with over 100,000 new workers joining by the third quarter of 2023, as reported by the Malaysia Digital Economy Corporation (MDEC). More than just a vibrant employment marketplace, the Malaysian gig economy is a foundation for fostering social development, ensuring that economic advancements benefit everyone in our nation.

A crucial aspect of the gig economy’s growth is the interplay of supply and demand dynamics, streamlined by the advent of online platforms. These platforms diminish the barriers typically encountered in traditional job markets, facilitating efficient connections between gig workers and employers. On the supply side, the gig economy caters to myriad needs and aspirations.

It offers unprecedented flexibility, enabling people to supplement their income, gain autonomy as their own bosses and seize opportunities that may be scarce in their localities. The gig economy is especially beneficial for youth, women, relatively low-skilled workers or those in areas with limited local job options by offering the ability to earn income through a variety of online platforms.

On the demand side, the gig economy is reshaping the traditional business hiring model. Employers are increasingly drawn to gig workers for their ability to offer specialised skills not readily available in-house. The flexibility in cost compared to hiring permanent employees and the ability to trial freelancers before offering permanent roles are appealing aspects of this model. This approach is particularly advantageous for micro, small and medium enterprises as it widens their talent pool, allowing them to scale up or down based on their immediate business needs.

These platforms, rooted in a deep understanding of the local cultural context, are not just businesses but vital components in shaping the local economy. They often work in collaboration with government agencies to align their services with national development policy goals. Kiddocare, for instance, has revolutionised childcare by connecting parents with trusted, professional caregivers, it not only provides a much-needed service but also opens up new employment avenues.

As an emerging sector, the government has a crucial role to play in ensuring that the gig economy fulfils its socioeconomic potential, notably by offering income-earning opportunities and expanding social protection for the rakyat.

After all, it is widely recognised that gig work still often resembles informal or nonstandard work, placing individuals outside traditional labour regulations and leaving them without access to social insurance and benefits. 

While there is much work still to be done, the Malaysian government is taking a proactive approach to nurturing the gig economy, exemplified through various initiatives, ranging from building digital skills and improving the regulatory framework to expanding social protection.

For example, the primary objective of MDEC’s Global Online Workforce is to equip Malaysians with the necessary skills to excel in the digital freelance marketplace. This initiative is pivotal in ensuring the supply side of the gig economy is bolstered with proficient and skilled workers, ready to meet the dynamic demands of the global digital economy.

In parallel, Futurise, an agency under the Ministry of Finance, has taken significant steps to regulate and enhance the quality of gig services. The development of standard operating procedures (SOP) for mobile childcare providers, approved by Jabatan Kebajikan Masyarakat, illustrates this commitment. The SOP not only ensures compliance with safety and quality standards but also addresses public safety concerns, thus elevating the standard of gig work in crucial sectors like childcare.

With regards to the retirement savings programme, the Employees Provident Fund offers i-Saraan, a voluntary contribution initiative for self-employed individuals without fixed income and employees of the gig economy.

As we anticipate the future of Malaysia’s gig economy, it is essential to maintain a balance between unleashing its innovative potential and safeguarding against its perils.

Leveraging the gig economy as an instrument for labour market inclusion is paramount. This means investing in digital infrastructure and ensuring equitable access to technology, especially for communities at the margins. Such inclusion is key to unlocking the full promise of the gig economy, allowing it to be a true force for economic and social empowerment.

The rapid advancements in artificial intelligence (AI) promise increased productivity but also pose the risk of job displacement. It becomes critical to ensure that gig workers are not only skilled but also resilient to these technological shifts. This includes continuous upskilling and reskilling, enabling them to adapt and thrive in an AI-driven landscape.

In shaping the future of Malaysia’s gig economy, it is imperative to foster a collaborative environment encompassing the government, digital platforms, gig workers, employers and society at large. This unified approach is key to establishing a robust and equitable gig economy characterised by innovation, inclusivity and resilience. Such cooperation will ensure the gig economy is well-positioned to meet emerging challenges and seize new opportunities, paving the way for a sustainable and inclusive future that benefits all stakeholders.

Ahmad Azuar Zainuddin is CEO of Satu Creative, a consulting firm that works with Malaysian start-ups and social enterprises

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