Economists warn against calls for govt interference in gig economy

Economy minister Rafizi Ramli previously said that fixing the job market’s structure would be more effective than government intervention in the gig economy. (Bernama pic)

PETALING JAYA: Economists have cautioned against calls for government intervention in the gig economy, saying it is better to let the market solve its own problems following a protest by delivery riders over Grab’s recent revamp of rates.

Responding to the subsequent suggestion by economy minister Rafizi Ramli that the government instead focus on fixing the job market, Geoffrey Williams said that government intervention would lead to an increase in costs which would be transferred to the consumers.

This would then reduce demand for products and deplete opportunities for jobseekers in the industry, said Williams, a professor at the Malaysia University of Science and Technology.

“There’s no short-term solution for this through government policy. In fact, the market is solving its problems. Government interference is dangerous because it will kill the market’s solutions and make people poorer.

Geoffrey Williams.

“Fixing the job market is a priority to ensure fair wages and benefits in employment terms and conditions,” Williams told FMT.

He said fixing the job market would require employment law reforms that give employees more power to demand higher wages and benefits as well as terms and conditions such as flexible working arrangements and social protection.

Rafizi previously said that fixing the job market’s structure would be more effective than government intervention in the gig economy.

In an episode of his Yang Bakar Menteri podcast, he said it was more important that the government focus on salaries, upskilling, and job creation than on grappling with one or two companies in the gig sector.

His comments followed a protest by about 300 Grab delivery riders outside the tech giant’s headquarters, demanding that the company resolve several issues including the recent cut in the RM5 base fare for deliveries within the Klang Valley to RM4.

They also urged the government to intervene in Grab’s decision to introduce a redesigned earnings scheme, claiming it was opaque and that the new rates would result in lower earnings.

In response, deputy prime minister Ahmad Zahid Hamidi said he was dedicated to developing a gig economy commission.

Yeah Kim Leng.

Yeah Kim Leng of Sunway University also agreed with Rafizi’s suggestion, saying the distortion and segmentation of the country’s labour market had led to low wages.

He said the government should focus on bringing in more investments to create more jobs, increasing supply for employment over demand to allow an increase in wages offered.

“With the most stable political environment (in years), we can focus on enhancing the attractiveness of Malaysia’s investment environment, and showcase its ability to provide a conducive place for businesses to produce higher-value goods and services,” said Yeah. - FMT