02/07/2020 08:45 AM
Opinions on topical issues from thought leaders, columnists and editors.
By :
Dr. Noor Ismawati Jaafar

What is a Gig Economy?

A gig economy can be defined as an economy that is based on flexible and temporary activities, or freelance jobs that often involve communication with customers through an online platform. Some examples of the online platform that are widely used include Foodpanda, Grabcar, GoGet, Doctor2u, Kaodim and Homage. The gig economy gets its name from the type of work which is assigned to an individual “gig”. The simplest examples of a gig can be observed in activities involving the work of a musician or artist hired to perform in a specific event or short-term engagement. The terms “sharing economy” and “collaborative economy” are the terms synonym with the gig economy.

The gig economy has been identified to be a source of economic growth for a country. Recently, the Malaysian government allocated RM75 million to promote the gig economy and provide a social safety net for gig workers through the PENJANA Economic Recovery Plan. The government will provide a matching grant of up to RM50 million for gig economy platforms which contribute towards the employment injury scheme of the Social Security Organisation (Socso) and the i-Saraan contribution of the Employees Provident Fund (EPF). In addition, the Malaysia Digital Economy Corporation (MDEC) will be provided with RM25 million for the Global Online Workforce (Glow) programme to train Malaysians to earn from serving international customers while they work from home (WFH). While the term is gaining popularity in the society, less is understood about what it takes to participate in gig economy.

Components of a gig economy

In general, there are three components of a gig economy that differentiate it from the conventional economy:

Independent workers – workers who are paid by the gig (a job, a task or a project) as opposed to those who receive a salary or wages;

  • Consumers - who need a specific service, e.g. a ride to their next destination, or a delivery of a particular item, or a sharing of knowledge on their favourite food; and

  • Companies – organisations that connect the workers to the consumers in a direct manner which includes the use of app-based technology platforms.

  • However, the gig economy comes with both the advantages and disadvantages that affect its growth.


    The gig economy offers many opportunities to us where it provides:

    • Independence – especially for workers who like to be left alone while they complete a task or project.

    • Flexibility – workers are able to work from home which helps in balancing work and family.

    • Variety - a wide variety of tasks and customers every day keeps the work interesting and exciting.


    Nonetheless, the gig economy is not spared from challenges such as:

    • Stress – the flexibility of gig work requires the workers to constantly be looking for their next gig. In addition, dealing with changes in their current contract can result in increased stress both physically and mentally.

    • Low pay – a recent study by Bank Negara Malaysia in 2018 estimated that the average income of a full-time gig worker is RM2,999 per month which is only a few hundred more than the living wage threshold (RM2,700) in a big city like Kuala Lumpur. As such, gig workers may resort to taking up multiple gigs to make ends meet.

    • No employment benefits - gig jobs mostly do not come with any health or retirement benefits for workers. According to a study made by the Department of Statistics Malaysia (DOSM) and Khazanah Research Institute in 2017, some 66 per cent of gig workers did not have a retirement plan, 33 per cent did not have a personal financial plan and 55 per cent have less than three months savings.

    Are our workers ready for the gig?

    In order to continue surviving in the gig economy, people need to equip themselves with the right skills as follows:

    • Self-direction – workers have to learn to work without the guidance of a boss because they are setting the goals and are responsible for success or failure.

    • Agile learning – workers have to show their ability of continuing to grow their skills and incorporating new ideas and new information into their work.

    • Hustling – workers need to create new opportunities for themselves by creating sales leads and turn them into paying customers.

    • Self-promoting and branding – workers have to market themselves and engage in self-promotion to create their “personal brand”.

    • Documenting work (portfolio) - workers have to learn to document their work on a regular basis and to create a portfolio of accomplishments that they can share with potential customers.

    What does the future hold for gig workers?

    In the next five years, the number of gig workers is estimated to be 40 per cent of the total workforce in Malaysia. It is further estimated that the gig economy will contribute 26 per cent of the total economic growth. However, there are fundamental issues such as job security, health benefits, financial savings and welfare of gig workers that require deeper consideration before a worker decides to jump on the bandwagon. Although a gig economy seems to be promising for short-term economic solutions, the long-term potential looks rather uncertain.

    -- BERNAMA

    Dr Noor Ismawati Jaafar is an Associate Professor at the Department of Operations and Management Information Systems, Faculty of Business and Accountancy, University of Malaya (UM) in Kuala Lumpur.

    (The views expressed in this article are those of the author and do not reflect the official policy or position of BERNAMA)


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