‘If proposed commission not executed carefully, companies running platforms may increase charges’

PETALING JAYA: Economists have called for government-introduced reforms for the gig sector to be implemented gradually to avoid a sudden rise in the cost of doing business.

Monash University economics professor Dr Niaz Asadullah said if the proposed Malaysian Gig Economy Commission is not initiated carefully, companies that run gig platforms would increase their service charges.

“Delivery fees and rates may rise significantly if the platforms face reduced business flexibility and increased costs in operations. It could also lead to decreased job opportunities for p-hailing workers.”

He recommended that gig workers be formalised by the authorities through registration with the Employees Provident Fund and Social Security Organisation.

“Income disparities are essentially a downside of gig platforms, where flexibility comes at the expense of the type of protection and laws for regular employees in a conventional economy.

“This can be solved by introducing unemployment benefits that ensure access to skills development schemes and implementation of minimum wage standards.

“There is also a need to better regulate gig platform employers to curb unfair practices, stop worker abuse and improve accountability,” he said, adding that gig worker associations or unions should be empowered with collective bargaining powers.

Niaz said policymakers must ensure that they minimise the welfare costs of any potential trade-off between labour market flexibility and job security.

He said the introduction of the Malaysian Gig Economy Commission is certainly a positive move that could improve worker welfare as well as productivity.

“Nearly a quarter of our workforce today relies on gig work, yet the terms of employment are not fully formalised, and pay is low and often irregular.

“Gig workers also have limited prospects for upskilling and retraining. These deficits will undermine major recent measures such as a progressive wage policy towards a high wage and high productivity labour market.

“Women and single mothers who have to shoulder the burden of family responsibilities can benefit from the Malaysian Gig Economy Commission. With better flexibility, this will mean increased well-being as work-life balance will improve.”

University Malaya economics professor Dr Nazari Ismail said the commission may not result in a major change since the gig economy is a result of the bank-based financial system that created huge debt burdens for all sectors and increased the cost of living.

“Policymakers cannot do much because the main force driving the gig economy is the bank-based financial system that forces all organisations to cut costs and increase efficiency.

“As a result, the gig economy is unavoidable because people need to work harder to earn a living. It cannot force a change in the gig economy trend because it is an outcome of a system.”

He also said firms would resist increased regulations by the Malaysian Gig Economy Commission because it would negatively affect their efficiency and increase cost of operations.

“Only organisations that are not under a debt burden will not mind the increased regulations because they are not under severe pressure to increase their efficiency or reduce costs.”

Nazari suggested the government encourage firms not to resort to debt financing for their operations because that would force them to adopt gig economy concepts to reduce costs.

“In the end, they will exploit their workers to reduce costs so that they can cope with their debt burden.”

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