February 28, 2024
KUALA LUMPUR – The number of Malaysians working in the gig economy reached an all-time high of three million in 2023, sparking concerns that there will be a shortage of skilled workers in the long term if the trend continues.
The record numbers, representing more than 17 per cent of the country’s workforce, are a marked 25 per cent rise from the 2.4 million self-employed workers recorded in 2021, according to Maybank Investment Bank Research.
The increase is worrying as it comes during a period of low unemployment, when Malaysians should be able to find secure jobs with benefits. Even more worrying, figures from the Department of Statistics showed that close to 98 per cent of delivery riders in 2022 were aged 30 and below, with about 40 per cent of them secondary school graduates.
In 2021, more than 60 per cent of informal workers in the non-agriculture sector were those with secondary school qualifications.
Socio-Economic Research Centre executive director Lee Heng Guie said industries may struggle to find skilled workers in the long run if young people forgo higher education to work in informal, unregistered businesses that do not cough up money to train workers.
“The country needs to have more skilled workers if it wants to move forward in high-tech industries such as artificial intelligence. Unregistered businesses that bring in less investments coupled with the growing number of low-skilled workers in the country will eventually weaken the country’s economic growth,” he told The Straits Times.
According to Maybank Investment Bank Research, self-employed workers are essentially daily income workers such as freelancers, hawkers, petty traders, food stall operators and sole proprietors.
The growth in informal jobs stood at 6.5 per cent in 2023, which surpassed total employment growth at 2.4 per cent last year, said Maybank Investment Bank Research. This was despite the fact that the country’s unemployment rate stood at 3.4 per cent in 2023, the lowest since the pandemic, according to the Department of Statistics. The data indicated that these Malaysians chose to be self-employed despite a stronger job market.
Workers cited a lack of opportunities, stagnant wages and inflexible working arrangements in conventional nine-to-five jobs as reasons they chose the gig economy.
Mr Muhammad Fadhilah Hafizi decided to become a food delivery rider about a year ago to pay off his debts. He told ST he is seeking to work at a company for a fixed monthly salary, but they offer wages lower than his current gig by at least 30 per cent.
“I am already in my 20s, and this is not the time to further my studies as I don’t have enough money. Once my debts are paid, I will look for another freelance job that has better wages,” said the 23-year-old, who has a Sijil Pelajaran Malaysia (SPM) qualification, the equivalent of Singapore’s O levels.
In May 2023, a survey by a private university found that 49 per cent of SPM school-leavers did not plan on furthering their studies. And 26 per cent of them said they planned to become private-hire drivers or delivery riders.
A study by the Department of Statistics conducted from March to December 2022 showed that close to 12 per cent of p-hailing workers – a term used in Malaysia to describe those who deliver food, drinks and parcels using motorcycles – were degree holders.
UOB Group’s senior economist Julia Goh expects the higher economic growth in 2024 to drive the informal jobs sector to grow between 4 per cent and 5 per cent, mainly in the services industry. This will lure more Malaysians to switch to gig roles, she said.
“Many millennials prefer to be their own boss. Based on the evolving nature of the labour market, informal workers will continue to rise (in number) due to low wages in traditional jobs and preference for flexible hours,” she told ST.
Some turn to gig work to supplement their income and cope with rising costs of living.
The trend has continued even though economic indicators are improving. In 2023, Malaysia’s inflation rate was 2.5 per cent, compared to 3.3 per cent in 2022.
Mr Mohd Nordin Abdul, 28, decided to work as a private-hire driver part-time to earn extra income, although he has a full-time job as a housekeeper in a four-star hotel in Kuala Lumpur.
“I have to work freelance to make ends meet, because my full-time job salary is not enough to survive for a month. Everything is so expensive now. I will continue to do this gig job as it has flexible working arrangements,” he said.
Meanwhile, skilled professionals are choosing to work on a freelance basis, trading job security for flexible hours.
Former journalist Amir Imran, 37, who now works as a freelance copywriter, said his income rose by 50 per cent after he went into freelancing, although job security can be a concern at times.
“There can be ‘drought’ between jobs, but the freedom allows me to indulge in work I love, which I would otherwise not be able to pursue. Job security does worry me a little bit, but I am sure I will be able to secure a job that will be enough to survive if push comes to shove. I will continue to opt for jobs that give me flexibility over my schedule even if I get married,” said Mr Amir, who is single.
As more Malaysians opt for self-employment, concerns over their retirement savings prompted the Employees Provident Fund, Malaysia’s retirement fund, to introduce the Saraan incentive scheme or i-Saraan in 2018. Self-employed workers would need to register for the scheme to get assistance, including government incentives and death benefit. Workers can contribute voluntarily to their retirement accounts and the government’s contribution was increased to RM500 (S$141) a year under Budget 2024.
Human Resources Minister Steven Sim told ST that his ministry is undertaking a study to revise the Employment Act to provide more protection for informal workers.
“We are focusing on finding ways to formalise the informal sector for the benefit and protection of workers,” said Mr Sim. He declined to comment further as it is being studied to assess feasibility.
“This can also involve recognising the skills and experience gained in the informal sector through certification programmes,” said Mr Sim.