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Growth of the Gig Economy

In October last year, Prime Minister Tun Dr Mahathir Mohamad said the gig economy had been identified as a new source of economic growth and would be made part of the 12th Malaysia Plan.

The word “gig” used to be associated with musicians or performing artistes hired to play for specific events or short-term engagements. But this buzzword has trickled its way to almost any kind of employment, particularly on an ad hoc or temporary basis.

It concerns mainly freelancers, project-based workers, independent contractors as well as part-time hires. They are all part of a growing trend called the gig economy.

According to financial planning lecturer Associate Professor Dr Mohamad Fazli Sabri, people have been doing “gigs” for decades.

Mohamad Fazli, who is Universiti Putra Malaysia’s Faculty of Human Ecology deputy dean (Graduate Studies and Industry and Community Network) said: “Working part-time and freelancing have been around for ages. These jobs are becoming more pronounced due to the rise of digital platforms such as smartphones and the Internet.

“Technological advancements have paved the way for those who are interested in offering services through websites or mobile apps,” he said, adding that it is more popular among young people.

“There has been much debate on what comprises a gig economy and how it is different from freelancing. To put it simply, both terms are synonymous. It can also be referred to as a sharing or collaborative economy.

“While we are familiar with food delivery services, professionals are now starting to offer services like legal consultation, journalism and copywriting, among others, under what classifies as gig economy.”

Mohamad Fazli said the gig economy has benefited consumers as they are provided with an array of options and services to choose from.

For large organisations, it increases flexibility and efficiency while lowering the cost of doing business.

“Gig workers enjoy flexibility, lucrative pay and the freedom to choose the type of work. No wonder people are turning away from desk jobs to be a part of the gig economy,” he said.

When done right, working on gigs come with the perks of independence, peace of mind and good pay.

Mohamad Fazli said that in the United States, gig workers are expected to make up around 40 per cent of its workforce by this year.

“In Malaysia, food delivery services are flourishing. To date, there are 13,000 Foodpanda and 10,000 Grab Food riders in the Klang Valley.

“There are people who undertake side jobs on top of full-time jobs to bolster their income or even to maximise productivity,” he said.

 

PITFALLS

While the unemployed, students and fresh graduates struggling to land a first job may find the gig economy platform advantageous, there are rising concerns about worker welfare and a deteriorating safety net.

Mohamad Fazli said: “Many gig workers are from the younger generation. They may not be fully aware of the importance of having Employees Provident Fund (EPF) savings which provides retirement funds and benefits.

“They must be equipped with financial literacy or else they will be financially vulnerable.

“Besides EPF, full-time workers enjoy a certain amount of security in terms of consistent pay and health benefits.

“Those who are working gigs at the low-skill level have little room for career growth and development. There are no opportunities to climb up the ladder and secure promotions.

“Gig workers with higher education backgrounds must think of ways to move towards a professional level befitting their qualifications,’’ he added.

“To overcome this, we have a secure way of paying freelancers. We take advance payment from the companies and work as a mediator to ensure that payment is made to the freelancers once the jobs are completed.”

Source: https://www.nst.com.my/education/2020/02/569347/growth-gig-economy