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Gig economy: Pitfalls and opportunities | Malaysia

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The Foodpanda logo is seen on delivery bikes in Petaling Jaya October 1, 2019. — Picture by Ahmad Zamzahuri
The Foodpanda logo is seen on delivery bikes in Petaling Jaya October 1, 2019. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, Dec 8 — Gig economy: a phrase that has been bandied about when conversations turn to the current job landscape for young professionals, new graduates, getting a job and making ends meet.

But what exactly is gig economy and what are the pitfalls or advantages of being part of it? And what awaits those who rely on these part-time, transient or ad hoc work?

Simply defined, the gig economy is a labour market characterised by the prevalence of short-term contracts or freelance work done by individuals; driven by the digital environment and the prevalence of apps that instantly communicate information and opportunities for work.

The gig economy today is virtually synonymous with freelancing — which everyone knows have both positives and negatives aspects to it, one which offers both opportunities and uncertainties.

This growing segment of the economy is mostly populated by the younger generation more attuned to the digital environment.

A study conducted by PricewaterhouseCoopers (PwC) showed that the gig economy is forecast to be worth approximately US$63 billion (RM263.3 billion) globally by next year.

In its research note, it said that the rise of the segment, comprising wholly of impromptu jobs or “gigs”, or contract assignments, will be a challenge for human capital and resources management.

PWC said some 46 per cent of human resource professionals worldwide expects that by 2020, up to 20 per cent of the workforce will comprise contract workers on short-term or freelance assignments.

While these part-time jobs enable the workers — mostly new graduates and new entrants to the marketplace, or those trying to supplement their existing incomes or displaced due to downsizing — to meet their current financial obligations while awaiting more permanent positions, the situation nevertheless raises some key concerns for the future.

One of the key concerns is that the gig economy will place these workers into a skills and career trap.

Planetmahir Sdn Bhd co-founder and chief executive officer Datuk Dr Ahmad Ramzi Mohamad Zubir said in the next five years, gig economy participants will account for more than 40 per cent of the workforce.

“However, those in the gig economy will always be in temporary or part-time positions and they will not be able to develop solid skills or build in-depth expertise, which can offer a more positive career path.

“If they are unable to break the cycle of transient or temporary jobs, they would be unable to get into better paying, or more permanent jobs which offer stable benefits and compensation,” he said.

This, said Ahmad Ramzi, would leave them unable to build savings or a foundation for their future earnings to support them in time to come.

Additionally, employers would not be able to access real skills or have a truly competent employee base to strategically grow their business.

Ultimately it would widen the income gap between the haves and have-nots, and affect the country’s social support infrastructure to address the needs of an ageing population.

A Grab pick-up and drop-off station is seen at the entrance of Kuala Lumpur City Centre in Kuala Lumpur October 3, 2019. — Reuters pic
A Grab pick-up and drop-off station is seen at the entrance of Kuala Lumpur City Centre in Kuala Lumpur October 3, 2019. — Reuters pic

Based on data by the Employees Provident Fund (EPF), the growing gig economy and an ageing population are expected to cause a decline in the per centage of workers contributing to the fund.

This is as opposed to permanent jobs where private sector wage earners contribute to the EPF while civil servants have their pensions.

Why then are the younger generation participating in increasing numbers in the gig economy if the downside is somewhat discouraging?

A recent survey by Bernama involving e-hailing drivers, freelancers as well as contract workers, showed that the majority of gig economy participants are young, educated and struggling to find a stable job.

Many are struggling to pay debts such as student loans and only a small number of gig economy workers chose to be involved due to the time flexibility it offers.

Muhammad Idham Khairuddin, 24, who graduated last year and is now a full-time e-hailing driver said that it has been tough finding a job that fit the course he took in college.

“I studied communications and right now, everything is focused on digital. Unfortunately, that was not what we studied, so we have knowledge that employers are not looking for.

“What is more unfortunate is employees prefer to hire someone with experience than fresh graduates, citing that we do not have the experience needed to fit in the company. But how are we supposed to get any experience if they don’t want to hire us?” he asked.

The gig economy thus brings us back to a question that has been asked time and again: how well are local higher education institutions updating and adapting their areas of study or curriculum in line with market developments, and to enhance the employability of their graduates?

Another gig economy participant, freelance designer Andrew Liew Kim Leng, 31, said that he had always preferred to work as a freelancer — where every cent he earned was his, without being confined to specific ways of working, or being required to adhere to company regulations.

More importantly, he enjoyed the time flexibility.

“At times, I have several projects in a month but some months are dry. I do e-hailing when I have nothing else to do. I can manage, so far,” he said.

However, both Mohammad Idham and Liew, and possibly thousands of others share something in common — they do not have a back-up plan or savings for the twilight years.

Indeed, while the gig economy does provide a short-term solution for economic woes, it does not appear viable as a longer-term source of income.

Therefore, is there a need to regulate the gig economy to put in place some protection measure to ensure the well-being of gig workers, for now as well as for their future?

Recently, in Parliament, Prime Minister Tun Dr Mahathir Mohamad said that gig economy has been identified as a new source of economic growth and would be made part of the 12th Malaysia Plan.

Indeed, World Bank data puts Malaysia’s gig economy as rising to as much as 26 per cent of total economic growth — underscoring the seriousness of this segment, and thus its potential impact on society.

Dr Mahathir said the government has realised the implications of gig economic work as well as the need to safeguard worker rights.

“Therefore, the government has taken a few initiatives with the objective of leveraging on the gig economy. In our draft of the 12th Malaysia Plan 2021-2025, we will focus on the gig economy as a new source of economic growth, but at the same time, we need to make sure it is sustainable and inclusive.

“More importantly, we have to ensure that we safeguard the interests and welfare of the workers and employers to focus on the gig economy,” he said, adding that those in gig economy runs the risk of being mistreated, exploited or disadvantaged by employers.

Without a policy in place to address such issues, the expansion of the gig economy could create financial instability which then poses more serious socio-economic and political issues in the long run for the country. — Bernama

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Gig workers need fair deal in our ‘convenience’ economy

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COMMENT | In a simpler age, there was only one number to remember for food deliveries. Helpfully, there was a jingle that was repeated often on the few radio stations that operated back then. There were fewer digits in the telephone number itself which made it fit better in a melodic hook that was only a few seconds long (though I can’t recall hearing a Malay version of tujuh-lima-lima…).

You had the option of ordering various pizzas, garlic bread, or simple pasta dishes, which were a huge treat back then, what more the novelty of having it delivered directly to your front gate.

Of course, today food deliveries are common. Some are still operated by the restaurants, but usually, they are available through popular food delivery apps, which are the bedrock of the convenience economy.

Consumers are now able to get access to food, goods, and services whenever, wherever, and however they like, made possible by hundreds of thousands of people zigging and zagging their way across cities.

Like many things, the pandemic and multiple lockdowns have sped up the widespread adoption of delivery services by businesses and customers, but it was already a growing trend before that.

It made sense. Why spend time travelling, parking, and all that hassle waiting for food elsewhere, when you can just make a few taps and continue being in the comfort of your own home? There are also a huge number of promotions and deals giving you discounts on your orders, while earning you points for more deals in the future. It’s not a difficult choice to make, and this was pre-Covid-19.

Once the virus was in the picture, staying home was not only the…

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How to decide if a gig economy worker is an employee or self-employed? Guidance from UK Supreme Court’s decision in landmark Uber case

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Introduction

In recent years, the advance in technology and shifting economic conditions have contributed to the emergence and rise of “gig economy”. Gig economy refers to on-demand, peer or platform economy. It often involves a business model where individuals take up on-demand jobs or gig works through digital platforms such as a smartphone application or website. Popular examples of such applications in Hong Kong include Uber and Deliveroo.

While gig workers are often viewed as “self-employed persons” or “independent contractors” in many jurisdictions and are unable to enjoy protections under labour law, a recent UK Supreme Court decision classified Uber drivers as “workers” and ruled that they are entitled to minimum wage, paid leave and other legal protection. Although the services provided by Uber has been ruled illegal in Hong Kong, the case sheds light on the classifications of gig workers in general.

UK Supreme Court ruling

In Uber BV and Others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5, the UK Supreme Court explored the employment status of private hire vehicle drivers who provide their services through the Uber application. The UK employment law distinguishes three categories of persons who enjoy varying degrees of labour protection, including: 

  1. those employed under a contract of employment (which is akin to the concept of “employees” under Hong Kong employment law); 
  2. those self-employed people who are in business on their own account and undertake work for their clients (which is similar to the concept of “independent contractors” under Hong Kong employment law); and 
  3. those “workers” in an intermediate class who are self-employed but provide their services as part of a profession or business undertaking carried on by someone else, who tend to have some characteristics of both of the above categories (but there is no such intermediate category of “workers” under Hong Kong employment law). 

The Supreme Court’s findings 

The Supreme Court considered the purpose of the relevant statutory provisions, which is to offer protection to those people who are in a subordinate and dependent position in relation to the employer and are vulnerable to exploitation.

In determining the status of Uber drivers, the Supreme Court took into account a number of facts found by the labour tribunal which point towards to the relative degree of control exercised by Uber over their drivers. These findings of facts include (1) Uber being able to fix the remuneration paid to drivers, (2) the contractual terms on which drivers perform their services are dictated by Uber, (3) once drivers logged onto the Uber application, their choice of accepting requests for rides is restricted by Uber, (4) Uber exerts significant control over how drivers deliver their services by various methods including vetting the types of cars, suggesting routes and using rating systems for managing performance and terminating relationship with drivers, as well as (5) restricting communication between passengers and drivers to prevent drivers from establishing any relationship beyond am individual ride. 

On the basis of the labour tribunal’s findings of facts, the Supreme Court ruled that Uber exerted tight control on the drivers and the services provided. The drivers were in a position of subordination and dependency in relation to Uber such that the drivers had little or no ability to improve their economic position through professional or entrepreneurial skill. In practice, the only way the drivers can increase their earnings was by working longer hours while constantly meeting Uber’s measures of performance. The Supreme Court found that the drivers were rightly found as “workers” under UK employment law.

Classification in Hong Kong

In Hong Kong, an individual may perform work as an “employee” or an “independent contractor”. As per the Court of Final Appeal’s decision in the leading case of Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951, the modern approach to the question of whether one person was another’s employee is to examine all the features of their relationship against the background of the indicia developed in the case law with a view to deciding whether, as a matter of overall impression, the relationship was one of employment. The following indicia of employment, albeit not exhaustive, will be likely be considered by the court to decide whether there is an employer-employee between the parties:

  • the degree of control exercised by the employer; 
  • who provided the equipment for performing the services; 
  • whether the individual may hire additional helpers for performing the services;  
  • the degree of financial risk taken by the parties; 
  • the degree of responsibility for investment and management of the parties; and 
  • whether and how far the individual had an opportunity of profiting from sound management in the performance of his or her tasks. 

Although the classifications adopted by the English and Hong Kong Courts are not identical, and it seems that in Hong Kong there is a higher threshold for individuals to be entitled to protections under its employment law as “employees”, the case still sheds light on the possibility that the Hong Kong Court may reach an overall impression that gig workers such as Uber drivers are not independent contractors given the significant degree of control that the business has over the gig workers, which is an important factor that Hong Kong Courts would consider when determining whether an employer-employee relationship exists

At the same time, there have been calls on the Hong Kong Government to address the emergence and rise of gig economy and review the existing labour legislation to enhance protection of labour rights of gig workers. However, the Hong Kong Government has stated that it has no plan to expand the scope of the current employment legislation to cover selfemployed persons

Takeaways

For companies which adopt business models involving the provision of services by gig workers, it is imperative to consider the classification of such gig workers from an early stage and seek professional advice on the issue if needed. Whether an individual is classified as an “employee” or an “independent contractor” will have significant impact in terms of the statutory benefits enjoyed by the individual and the statutory duties and obligations imposed on employers, which may in turn affect the financial planning, risk management and business viability of the companies. 

 

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Egypt aims to register millions of gig workers for COVID-19 aid

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Temporary workers have been hard hit by the pandemic’s fallout but some may be wary about formalising their status

By Menna A. Farouk

CAIRO, March 1 (Thomson Reuters Foundation) – Egypt will start registering millions of gig workers in order to offer them health insurance and emergency state aid during the coronavirus pandemic, which has taken a particularly heavy toll on the nation’s ad-hoc employees, officials said.

There are at least 14 million gig workers in Egypt, and while some workers and campaigners welcomed the government’s drive, others warned that many workers could be reluctant to sign up – fearing tax and social security payment demands.

The government said it plans to identify and support 2 million gig workers in the country of 100 million people by the end of this year, labour ministry spokesman Haitham Saad El-Din said on Saturday.

“It is part of a government plan to give assistance to this segment of the society which has been majorly affected by the pandemic,” he said, adding that officials were focusing first on identifying casual construction labourers.

Gig workers who have their employment status registered on their national identity cards under a new “irregular employment” category will be given free social security insurance and be eligible for state welfare programmes.

Egypt’s state-run insurance plan includes life insurance and disability cover, as well as covering healthcare costs.

The announcement is the latest in a series of government measures aimed at shielding vulnerable groups from the economic fallout of the pandemic.

Soon after the coronavirus outbreak began, it launched a programme that supports irregular workers with monthly aid, and Egyptian President Abdel Fattah el-Sisi called for financial support to be boosted when a second virus wave took hold.

State welfare spending surged 36% in the first half of the current fiscal year, Finance Minister Mohamed Maait said recently.

ON THE BOOKS

Some daily labourers hailed the registration drive as a positive step, saying it would help bring them into the formal economy and recognise their economic contribution.

“Millions of Egyptians have been affected by this pandemic but it’s really good that the government is not leaving us behind,” said Farouk Mahmoud, 35, a temporary worker from the city of Sohag.

Still, while the latest data puts the number of gig workers at 14 million, the real number may be much higher – making registering them a daunting administrative task, said Bassant Fahmi, a member of parliament’s economic affairs committee.

Some workers may also be wary about being on the books.

“Many of them may fear being asked afterwards to pay taxes or insurance. That could mean a lot of gig workers avoiding being identified by the government,” she told the Thomson Reuters Foundation.

But besides any misgivings about being under the government’s radar, many gig workers in Egypt are more concerned about the dearth of permanent job opportunities – especially for young people – and the health of the wider economy.

“It isn’t crucial for me to have a job on my ID,” said Abanoub Lotfi, a 26-year-old driver for ride-hailing service Uber, who has a degree in commerce.

“What really matters is that the government offers me a stable job that suits my academic background and helps me afford my needs and those of my family.”

Related stories:

Tech-savvy women could beat COVID-19 job blues in the Arab world

Egypt begins COVID-19 vaccination drive with frontline medical staff

Egypt eyes slow return for tourism after revenues dive in 2020

(Reporting by Menna A. Farouk; Editing by Helen Popper; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org )

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