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The gig economy has been identified as a new source of economic growth and will be made part of the 12th Malaysia Plan. FILE PIC

TUN Dr Mahathir Mohamad told Parliament last week that the gig economy had been identified as a new source of economic growth and will be made part of the 12th Malaysia Plan.

The prime minister added that the government is considering new laws to regulate the new economy and to protect the workers. A special committee (comprising representatives from three ministries) had been set up to resolve various issues.

There are currently some 13,000 Foodpanda and 10,000 Grab Food riders in the Klang Valley, and over 160,000 e-hailing drivers employed in the Malaysian gig economy.

Unlike regular employees, gig economy workers do not have financial safety nets, such as pension and savings in the Employees Provident Fund.

The announcement drew the expected support as well as criticism from the public.

AmBank Group chief economist Dr Anthony Dass agreed that a law to protect gig economy workers is needed.

Other netizens, however, argued that the new law will be a “death knell” for Malaysian entrepreneurs intending to launch their startup companies to participate in the gig economy.

The gig economy in Malaysia had grown by 31 per cent in 2017, surpassing the growth in the conventional workforce. In Malaysia, 26 per cent of our current workforce are freelancers and the number is growing.

In Australia, a million self-employed people work in the gig economy. In the United States, 40 per cent of its workers will be in “non-standard jobs” by next year.

WHAT IS A GIG ECONOMY?

A gig economy is a free market system, of which temporary positions are common and corporations engage independent workers for short-term durations.

The term “gig” is a slang word meaning “a job for a specified period of time” and is typically used in referring to live musical performances by musicians, singers and entertainers.

A business portal explained that in a gig economy, temporary jobs and flexible hours are the norm, and corporations hire “independent contractors” and free lancers, not full-time employees.

Operating on an online platform, the gig economy thus runs counter to the “ traditional economy” where full-time workers usually focus on building a life-long career in their place of employment.

The portal cautioned that for some workers, the flexibility of working gigs can actually disrupt work-life balance, affect sleep patterns and other activities of daily life.

Flexibility in a gig economy means that workers have “to make themselves available any time gigs come up, regardless of their other needs, and must always be on the hunt for the next gig”.

In a gig economy, greater freedom is enjoyed, but at the expense of not having “a steady job with regular pay and benefits”.

Due to its “fluid nature”, it is difficult to cultivate long-term and enduring relationships between workers, employers, clients and vendors.

NEED FOR REGULATIONS

Last September, California enacted a new law (known as Assembly Bill 5) requiring companies like Uber and Lyft to treat their workers as employees (not as “independent contractors”).

According to a New York Times report, these workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.

The new law, which codifies and extends a 2018 California Supreme court ruling (in Dynamex Operations West, Inc. v. Superior Court of Los Angeles) is expected to benefit at least one milion workers engaged as ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners.

Expected to come into force on Jan 1, 2020, the new law is applicable to app-based companies.

It is too early to say whether other states will follow California’s example in the near future.

According to a news portal (www.fastcompany.com) there are more than 57 million gig workers in the US and that number is growing.

The new California law is regarded as the first step in providing a safety net for the millions of workers who are not classified as employees (and therefore not entitled to the same benefits as those employed in the traditional economy).

Brittany Hunter, reviewing the California law in the FEE (Foundation for Economic Education) portal, said “California may have just passed a death sentence on the gig economy”.

The gig economy was never meant to be a traditional sector. It should not be treated as such.

The law on e-hailing (affecting our local GrabCar drivers) is now in force.

Strata parcel owners placing their properties on short-term rentals via the Airbnb platform are also now facing regulations from the local authorities.

But I do not expect the new gig economy law will make its way to Parliament any time soon.

The debate on the gig economy continues.

The writer, a former federal counsel at the Attorney-General’s Chambers, is deputy chairman of Kuala Lumpur Foundation to Criminalise War

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