Mandatory contributions now guarantee injury protection for all gig workers, but experts say coverage could be more comprehensive.
Under the Act, which comes into force in March, social security contributions covering injury and occupational diseases for gig workers will become mandatory.
Platform companies will be required to link their systems with the Social Security Organisation (Perkeso) to enable automatic deductions, replacing the previously voluntary Self-Employment Social Security Scheme (SKSPS), now known as Lindung Kendiri.
Protection under the new Act
Previously, gig worker social security coverage was voluntary and often platform-specific, resulting in low participation and leaving many workers exposed to income shocks due to administrative barriers and irregular earnings.
By making these contributions mandatory, the Act forms part of broader efforts to extend social protection to Malaysia’s expanding informal workforce which accounts for over 25% of the total labour force.
How mandatory coverage helps
According to Simon Brimblecombe, chief technical adviser and head of regional actuarial services at the International Labour Organization (ILO) in Bangkok, the move is clearly a step in the right direction.
He said the shift to mandatory coverage was particularly important, as voluntary schemes tended to achieve low uptake due to adverse selection.
“If you have a voluntary (injury) scheme, those most likely to have an accident or be in poor health are the ones who would sign up, making such schemes less sustainable. Thus, mandatory participation is really the way forward,” he told FMT.
He said the move would ensure that e-hailing and p-hailing riders – particularly those on motorbikes, who were often young and had families and were exposed to risks on the job – were covered, adding that this security would make a big difference for this group.
Protection gaps and further considerations
Mandatory contributions for gig workers are a crucial first step, but gaps remain in ensuring comprehensive social protection – including unemployment insurance, retirement benefits, and other risk protections such as for invalidity, and family and maternity benefits.
Brimblecombe said the next focus for gig worker protection could be introducing new or expanding existing protections.
He noted that while challenges with unemployment insurance could be addressed using real-time data on drivers’ earnings—effectively tackling issues like under-declaration—the bigger challenge remained retirement benefits.
He said a major problem faced by Malaysians was that many reached the ages of 55 or 60 with insufficient savings in the EPF.
“It’s always the hardest social security benefit to finance and therefore ensure adequate benefits, because you need to contribute about 15% of your salary over a long period to secure a decent pension,” he said.
Brimblecombe, who previously managed an ILO–Perkeso actuarial study on expanding coverage and improving benefits for foreign workers, said the agency had shown it could gradually extend protection based on actuarial findings.
He said the ILO’s costing of the foreign worker coverage expansion found it to be sustainable. However, he said, a long-term plan was needed to ensure gig workers were covered for risk benefits.
He added that the next actuarial valuation with Perkeso would assess the impact of the mandatory contribution on coverage. This work is being carried out under an outgoing ILO-Perkeso project which also looks at other benefit provisions.
A bigger responsibility for platforms
Meanwhile, Calvin Cheng, director of the economics, trade, and regional integration division at the Institute of Strategic and International Studies (ISIS), said platforms should take on greater responsibility through co-contributions.
“Platforms should not just register workers under the injury scheme, but also share the cost of financing social protection. They profit enormously from workers’ labour and, at the very least, should bear some responsibility for the risks those workers face,” he said.
Brimblecombe said that South Korea and Portugal could offer Malaysia some useful lessons.
In South Korea, he said, both the employer and platform worker contribute, noting that it was important not to place the entire contribution burden on the worker.
Meanwhile, he said Portugal’s system, which applied to all self-employed people, considered the dependency of a worker on a single employer.
If more than 50% of the value of work activity is with one entity, the business is considered a “contracting entity” and higher contribution rates apply if the dependency rate exceeds 80%.
He said Malaysia could consider Portugal’s approach to distinguish between occasional platform workers and full-time workers. - FMT
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