JOBS in the “precarious” informal sector are growing at a faster rate than in the formal sector, a study by government-linked think-tank Khazanah Research Institute (KRI) revealed.

This suggests that 1.4 million of the country’s workforce do not have legally mandated labour protections, such as sick leave, social security and retirement funds.

In 2017, about one in 10 workers, or 10.6%, held non-agricultural jobs in the informal sector, according to the study titled “Unregistered and ‘Invisible’: Workers in Malaysia’s Informal Sector”.

From 2011 to 2017, non-agricultural jobs in the informal sector grew by 4.5% per year, while those in the formal sector increased at a rate of 2.1%.

“Most workers in the informal sector were own-account workers and home-based,” said the report.

“More workers in this sector were in the older age categories compared to other non-agriculture sectors,” said lead author Siti Aiysyah Tumin.

“These observations suggest that a subset of the workforce might be dealing with vulnerabilities on multiple fronts.

“The precarious nature of work in the informal sector could be further amplified by a lack of social protections due to employment status and/or other age-related employment risks.”

The study was based on surveys of the informal sector carried out by the Statistics Department in 2011, 2012, 2013, 2015 and 2017.

These surveys considered a worker “informal” if the firms that hired them were profit-oriented and not registered with the Companies Commission of Malaysia, professional bodies or local governments.

The companies also employed fewer than 10 people, and were involved in non-agricultural businesses, said the study.

Poorer states are likely to have a higher proportion of informal workers compared to developed ones like Selangor and Penang.

Selangor has the highest number of workers in the informal sector nationwide because the state has the biggest workforce. However, only about 10% of its workers are in the informal sector, while only 5% of Penang workers are in this sector.

In comparison, one in every four workers in Kelantan is in the informal sector. The rate is 18% and 15% in Kedah and Terengganu, respectively.

“Regional variation in the share of informality could be the result of various factors, and this would require further research,” said KRI.

“Perhaps, the informal sector grows with the size of the population, as jobs in the formal sector are not growing as fast.

“One could also speculate that poorer states are more likely to have higher incidences of informality. States with an annual gross domestic product per capita of less than RM50,000 have a higher prevalence of informality.”

The services industry employs the most workers in the informal sector, while construction firms in the sector disproportionately employ more men.

The study showed women dominating jobs in human health and social work services.

More than 40% of informal workers in both urban and rural areas are home-based, while 30% said their places of work are not fixed. – April 7, 2020.