THE 12th Malaysia Plan will include the gig economy, reflective of its importance as we find ourselves increasingly reliant on it.

With an estimated 160,000 Malaysians working as drivers and riders for various e-hailing services – some 30,000 with Foodpanda and GrabFood – the figure is expected to rise as the younger generation finds it difficult to secure permanent employment. Add to that stagnating salaries, rising inflation and an increasing demand for work-life balance.

What’s there not to love? These services make it convenient to join and leave the workforce as and when the need arises. Many work on a “casual” basis to fulfil specific goals, such as earning money for marriage or to continue their studies. Others work part-time to supplement their income from their regular jobs. And, there are those who find gig work appealing as it’s more “relaxing”, or simply because regular nine-to-five positions are difficult to come by these days.

For end users, the democratisation of services means increased access to accommodation, food and transport, among others. The competition between these new and conventional service providers forces prices down, ultimately benefiting consumers.

There are downsides, though.

Without legislation, it’s difficult to control the said new services. For example, Airbnb generally operates outside the framework of hotels and purview of laws like the Innkeepers Act 1952. Its listing standards are also considerably lower than those hotels must meet, such as having the tourist accommodation premises licence.

Additionally, the government loses revenue, as Airbnb and its guests do not pay certain taxes and charges.

Similarly, e-hailing services are subjected to significantly less regulatory scrutiny, as well as pay lower licensing fees than taxis or car rentals.

Besides causing financial loss to Putrajaya, the gig economy also reduces the relevance of government agencies and enforcement bodies tasked with supporting the regulatory structure for various industries and the ecosystems that develop around them. When a disruption occurs, not only does it revolutionise an industry, cannibalising its profits, but it adversely affects the peripheral economic activities, too.

Another concern is that gig workers get fewer protections. While employers in other industries are required to pay various taxes and expected to provide employee benefits, such as health and dental coverage, pension plans and job security (or in lieu of this, compensation), participants in the gig economy are not typically considered traditional employees.

This has led to e-hailing drivers and riders forming associations, but they do little more than act as pressure groups and meeting coordinators, without the backing of any union-like or professional body and trade laws.

It is unfair to let companies in the gig industry get away with making profits from people’s labour without recognising them as “proper” employees, and for these firms to not share the government’s burden in providing social safety nets. For instance, the lack of medical insurance for gig workers further strains our universal healthcare system as they don’t have the option of going to panel clinics.

With dependence on the gig economy on the rise globally, more and more traditional business models are tech-proofing themselves to compete against these lean “disruptors” wanting to grab a piece of the next big thing with little concern about the roles and responsibilities of conventional employers, and keen to liberate monopolies, democratise the market, and make services accessible to both providers and receivers.

It is time the government takes a long hard look at this. – January 30, 2020.

* Emmanuel Joseph firmly believes that Klang is the best place on Earth, and that motivated people can do far more good than any leader with motive.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.