Gig workers' bill must balance flexibility with fairness

 The upcoming gig workers’ bill is much anticipated, and it has the potential to reshape the gig economy in Malaysia for the better – if crafted with precision.

“Precision” here includes defining clearly who gig workers are, identifying the underlying issues in digital labour that involve the potential misclassification of employment status and tailoring the regulations accordingly, bearing in mind the variations of work and autonomy levels across different sectors.

A key question from the bill’s enactment is whether it could inadvertently incentivise more workers into informal or precarious forms of employment, away from traditional jobs with stronger labour and social protection.

It is worth noting that Malaysia’s gig economy has been expanding rapidly. The number of “own-account workers” – a proxy for gig workers – increased from 2.39 million in 2021 to an all-time high of 3.1 million in 2024, representing more than 17 percent of the workforce.

In 2017 alone, it grew by 31 percent and continues to surpass formal employment, with 9.7 percent growth compared with 3.5 percent of total employment in 2022.

Clear definition needed

With more Malaysians relying on gig work, leaving this workforce unprotected would lead to a rise in the precariat and a growing financial burden on the social security system.

The bill must define clearly gig workers and account for the different natures of digital labour: web-based and location-based workers.

Web-based workers typically operate with greater autonomy, while location-based workers, specifically the ride-hailing and delivery sectors, face significantly more control from the platforms and reflect a stronger employer-employee power relationship.

Their economic dependency, asymmetric information and lack of negotiation power make them more akin to traditional employees, not “independent contractors”.

As seen in the United Kingdom’s decision to classify Uber drivers as “workers”, acknowledging the power dynamics within location-based work is essential to tailoring regulation. This reflects that the protection needed is not just for social protection, but also labour protection.

Meaningful, appropriate

Malaysia’s bill should similarly recognise these differences and have a tailored approach, ensuring that protections are meaningful and appropriate for both platforms and workers.

Relatedly, the bill must also address the unfair treatment meted out by platforms. Unlike traditional employees, many gig workers lack rights to due process or recourse if they are unfairly suspended or penalised by a platform’s automated systems.

The ride-hailing and delivery sectors are often dependent on algorithms that monitor, rate and sometimes suspend them without transparency or accountability.

To provide meaningful protections, the bill should introduce an accessible grievance system, the right to explanation and dispute, and collective bargaining. Establishing an ombudsman would allow workers to contest unjust algorithmic decisions and ensure procedural fairness.

The bill’s success will also depend on its ability to encourage participation in social protection schemes, an area where Malaysia has faced challenges.

Historical data from the Social Security Organisation indicates that both voluntary and mandatory contributions from gig workers are alarmingly low.

Data from 2022 showed that only about four percent of self-employed transportation workers had registered. Some factors attributed to the low sign-up rate include location-based workers’ lack of awareness and certain platforms’ reluctance to collaborate, and it could also be attributed to the limited and unsuitable coverage and lack of access to such protections.

Policymakers need to tailor both the protection coverage and mechanisms in which deduction is calculated and implemented to increase participation rates for different workers.

Unionising

Alternatively, mandatory Employees Provident Fund contributions from platforms could be considered for location-based workers consistently meeting a minimum weekly threshold of hours.

Such measures would secure financial stability and offer a safety net. Nonetheless, the calculation must be based and designed in such a way that it would not lead to burdening the lower-income workers or passing the cost to consumers.

Collective bargaining, such as the right to unionise, should be afforded to workers with strong employer-employee relationships. The Trade Unions Act 1959 only covers “employees”, while many location-based work does not fit with either “independent contractor” or “employee” nature of work.

Union representation would provide them with a collective voice to negotiate fairer terms and advocate for their rights. The right to unionise is not just about improving working conditions but a fundamental step towards levelling the playing field and empowering gig workers in an industry that increasingly relies on their labour but fails to protect them adequately.

Recognising that not all gig workers are the same and allowing sector-specific protections will ensure the bill’s effectiveness without burdening platforms with compliance costs or workers who prioritise autonomy.

If designed correctly, it could serve as a model for balancing innovation and labour rights, and it’s possible to support a flexible workforce without compromising on fair treatment and social security. - Mkini

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FARAH NABILAH is an analyst at the Institute of Strategic and International Studies (ISIS) Malaysia.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.