Final Report - Seu 230 Labour Economics

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SEU 230 LABOUR ECONOMICS

SEMESTER 1,2022/2023

ASSIGNMENT

REPORT TITLE:

GIG WORKERS: ISSUES AND WELLBEING PEKERJA GIG: ISU-ISU DAN


KESEJAHTERAAN

Lecturer Name :

No Name Number Matric

1. ESHA KAUR A/P JASWENT SINGH 157514

2. JIN WENJI 155082

3. NAWAL NADIAH BINTI MD SHAHAIDIL 158312

4. NUR AINA AQILAH BINTI HASBULLAH 159156

5. NUR ALIAH ILYANA BINTI JEFRY 159019

6. WANG JINGSONG 155179

7. ZHANG SHUNDA 155077

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SEU230 LABOUR ECONOMICS
SEMESTER 1, 2022/2023

GROUP WORK
EVALUATION

Assignment: GIG WORKERS: ISSUES AND WELLBEING

Group Number: A2

Name Matric Contribution* Remarks**


Number (Score out of 10)

Esha Kaur A/P Jaswent Singh 157514 10

Jin Wenji 155082 10

Nawal Nadiah Binti Md Shahaidil 158312 10

Nur Aina Aqilah Binti Hasbullah 159156 10

Nur Aliah Ilyana Binti Jefry 159019 10

Wang Jingsong 155179 10

Zhang Shunda 155077 10

2
Table of Contents

No Details Page

Abstract

1.0 Introduction 1-2

2.0 Issues of Gig Workers 3-10

2.1 - Lack of Job Security and Benefits 3-5


2.2- Financially Instability 6-8
2.3- Growing Competition 9-10

3.0 Well-being of Gig Workers 11-16

3.1- Financial protection 11-12


3.2- Safety Net 13-14
3.3- Minimum Wage 15-16

4.0 Conclusion 17

5.0 References 18-20

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ABSTRACT

Gig Workers are part time or independent workers who work in the service sector. There is no

doubt that the gig economy has boosted after the Covid-19 Pandemic and highlighted the plight

of gig workers as they do not receive equal benefits and perks as those affiliated with permanent

jobs. In this project, we have highlighted some of the issues faced by most gig workers in

Malaysia as well as globally. These issues include lacking in benefits and job security received

by gig workers, the financial instability and the growing competition among gig workers. Apart

from that, we have also suggested ways to look after gig workers’ well-being which includes

providing them with financial protection, safety net and introducing minimum wage for gig

workers across industries. Policy makers can develop effective measures to support the gig

economy as a new engine of growth by analyzing the labour market demand in detail.

Keywords: Issues, Well-being, benefits and job security, financial instability, growing

competition, financial protection, safety net, minimum wage

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1.0 INTRODUCTION

1.1 Background of gig economy

Since the beginning of the 2007+ crisis, the popularity of occasional and taskwork has grown

globally, particularly in the United States. During the crisis, it allowed businesses to cut labor

expenses and was sometimes the only opportunity for people to generate an income and make a

life. The concept of a "gig economy," defined by jazz club musicians in the early 1900s as

individuals enhancing work flexibility but without the benefits of the employed, such as

healthcare, pensions, and paid holidays, has been around for more than a century.

Consider the 1930s Great Depression. The concept of less reliable and less location-based work

grew in popularity. Drought and falling prices caused many farmers to sell their property. They

were unable to obtain stable employment. As a result, they were forced to work as migratory

workers, moving from farm to farm.The first temporary agency was established in the 1940s,

providing firms with temporary office workers and other clerically skilled labor.

As the need for more flexible work schedules and non-permanent labor increased in the

1990s, 10% of the US workforce was employed as contractors, temporary workers, and on-call

workers.When the digital era took off in the late 1990s and early 1990s, so did the gig

economy.Craigslist, Upwork, and other remote employment platforms and crowdsourcing

markets began to emerge, giving a venue for gig workers to find work.

A gig economy is a labor market in which contract workers and freelancers fill temporary and

part-time positions instead of full-time permanent employees. Flexibility and independence come

at the expense of job security for gig workers. Many businesses save money by foregoing

rewards such as health insurance and paid vacation time. Others offer some benefits to gig

workers but outsource benefit administration and benefit programs to third-party suppliers.The

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gig economy is a large and rising phenomenon that is rapidly affecting one of the most key areas

of the economy and society: the labor market. The phrase "gig economy" refers to labor markets

that are temporary, on-demand, irregular, and frequently task-based. The term "gig," which

originated in the music industry, is now often used to describe work in a far larger range of

businesses, including food and beverages, transportation, education, and many more.

The gig economy employs around 30% of Malaysia's working force (5 million individuals),

and the figure is expanding. With the advancement of technology, online platforms have been

freely and easily available to anybody, anywhere and at any time, increasing the number of

workers in the gig economy.

In particular, in Malaysia, on-demand app gig employment is generally accepted by a diverse

spectrum of people.E-hailing services such as Grab and MyCar (GOJO), as well as online food

delivery services such as Foodpanda and Grab Food, assist a significant portion of gig

employment in Malaysia (Lim 2021).The causes driving the growth in job transitions and gig-

workers in Malaysia, according to (Ng et al. 2017), include the accelerating cycle of

obsolescence and renewal of industries and job descriptions as a result of rapid technological

advances, and changes in the traditional employer-employee relationship, which has resulted in

more worker independence and decreasing stability in traditional formal employment.The

COVID-19 epidemic, which struck most industries and caused unemployment to surge, was

another reason that led to the expansion of the gig economy in Malaysia.

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2.0 Issues of Gig Workers

There are 3 main issues of gig workers which are lack of job security and benefits, growing

competition among gig workers and financial instability among gig workers that we will discuss

and look at in a deeper perspective.

2.1 Lack of job security and benefits

The gig economy can be demanding when there is no consistent source of income. You should

prepare for times when you might make less money since you might experience periods when it

is hard to get a job. The most recent instance is McDonald's, where employees at two fast food

locations recently took the uncommon step of going on strike in order to demand better

compensation, more secure contracts, and union recognition. The rights of the workers are not

the only concern here. Long-term commitments to unstable employment combine with other

problems when people do so. The exorbitant expense of housing keeps people dependent on their

parents for the rest of their lives. There are reasons to think that low-quality occupations with

unstable work schedules are bad for your health. The members of the socioeconomic categories

with the lowest levels of prosperity suffer the most from these drawbacks.

Some service jobs are even more insecure for casual workers. Not only do they have to bear

hardships from a small number of customers, but they also continue to work without security

because they may be fired at any time. As the Guardian has documented, a disproportionate

number of allegedly freelance workers for firms like Uber, Deliveroo and Hermes have

complained of low pay, uncertainty, callous treatment, and harsher working conditions for many

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workers in business models that depend on these freelance workers to deliver more tremendous

services to customers and greater profits to employers.

Since the outbreak of

COVID-19, it has had a great

impact on gig workers. Gig

workers have no source of

income during quarantine and

lockdown. Also, when things

got a little better, low-

income families found

that the gig economy opened the door for them to generate extra income. They are first exposed

to the Covid-19 infection and then exposed to the possibility of job dangers like accidents. Given

that they lack the same protection as full-time workers, the situation is even worse.

There are incredibly few gig jobs that offer retirement or health benefits of any kind. Even

though some long-term contracts may have modest benefit packages, this is uncommon. The risk

of gig labor is transferred from employers to employees, and individuals who engage in it may

experience financial instability and higher levels of economic and psychological stress than those

who work at traditional jobs. Of course, many of the protections offered by regular employment

are absent from independent labor. That covers things like the minimum wage, overtime pay,

paid parental leave, and health insurance with employer contributions. People may be at a serious

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economic disadvantage compared to regular employees if their gig employment doesn't pay

enough to cover those expenditures on their own.

Overall, despite the advantages of creating their own schedules and being their own bosses, the

way gig platforms function creates significant barriers to young adults' long-term engagement.

The absence of benefits, notably health insurance, was a significant worry with gig work.

Benefits were cited by the majority of research participants as a key benefit of traditional

employment, which is one reason why almost all of them were interested in obtaining full-time

traditional work that earned a living salary.

2.2 Growing Competition among gig workers

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The gig economy is made up of people who work on a short-term basis or as sole

proprietors or independent contractors. It is a new employment model in the framework of new

technologies, not synonymous with low-end employment, and is a more economical employment

model than traditional employment.

People working in the gig economy can register to work on the platform, and today the

gig economy is large and growing every day, with the number of temporary workers expected to

increase by more than 30 million worldwide in the next year. There are many reasons why people

want to join the casual workforce: mainly because it offers workers the flexibility of working and

the ability to telecommunicate. So part-time workers can choose their own free time to get the

job done.

According to a 2019 report by MasterCard, the global gig economy generates $204 billion

in revenue and is projected to expand by 17% by 2023. In the U.S., it is expected that the country

could witness even more odd-job workers by 2027. According to a report by Intuit, in the year

2020, 25-30% of the U.S. workforce consists gig workers and more than 80% of large companies

already plan to take on large numbers of gig workers in the coming years, which could

significantly reduce their company's financial outlay. Many independent workers today prefer to

have flexible hours when looking for work, especially during the epidemic, and this requirement

is especially important for parents who need to stay home to care for their parents and tutor their

children in school. The economic crisis and the impact of covid-19 have led to the bankruptcy of

many start-up companies, which are looking for other jobs as part-time workers. And some large

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companies, due to the economic downturn, can get the best talent at a reasonable price for a short

period of time, friendly to both parties. This is different from a company's full-time employees,

where the company does not need to pay for the odd jobs with five insurance and extra overhead

costs.

In the age of global outsourcing on internet platforms, the odd job economy is tearing

apart the traditional workplace. It is taking advantage of the fact that for the demand side, they

only need to place an order on the Internet, and there will be a large number of skilled people

putting in their "resume", and then the demand side can select the employees who meet their

needs from the large number of talents. Due to the rapid development of the Internet, the world is

now developing a huge, odd job market, and the odd job market is thus polarized, namely the

low-end odd job market and the high-end odd job market. In the low-end odd job market, the

industries such as online taxi, part-time take-away workers, couriers and errand masters, which

are paid on the basis of the piecework system, are the low-end odd job market. This kind of

market is very popular at present, because it has free working hours and achieves "more work,

more pay", which is exactly what many unemployed people and failed entrepreneurs will apply

for in the short term. In the high-end odd job market, such as the high-end talent market, medical

and education, students from universities and scientific workers from research institutes are

suitable "supplies".

With the booming odd jobs market and the increasing number of flexible workers, their

skills training, paid leave, and rights protection are not better protected. The odd jobs are

affecting people's better employment and since there is no social security provided for gig

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workers, the social costs of workers in the gig economy will be largely yield by individuals on

their own. As gig workers are freelance workers hence all risks associated with the work is the

individual’s responsibility.

Approximately 26% of Malaysia's workforce (equivalent to 4 million people) is reported

to be working in the casual labor economy, and that number is growing. Some join the casual

economy for the extra income, while others use it as their primary job. With the rapid growth of

the Internet, working from home may have become the preferred and norm for the masses,

especially since the outbreak has left a large number of workers facing home quarantine or

unemployment, with the percentage of part-time workers likely to exceed 26%. Even before the

pandemic, a Zurich Insurance study found that 38% of full-time workers in Malaysia were

considering exposure to the odd-job economy in the future, a figure already 20% above the

global average.

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2.3- Financial Instability

Gig workers make up almost 30% of the Malaysian Labour force, which has since been

booming, especially after the Covid-19 Pandemic phase which caused people to lose their jobs

and participate as gig workers in the economy. Gig workers may vary across various sectors,

including professional and non- professional. Most Malaysian gig workers fall in the non -

professional category who do either e-hailing such as Grab and AirAsia drivers or delivery

services such as GrabFood, FoodPanda drivers. These workers are often exploited in terms of

paying schemes, commissions and bonuses promised. E-hailing riders get paid for their job

based on how many deliveries they can do in a day and thus the income earned is unstable. This

issue created a ruckus recently where the food delivery riders went on a strike on August 5, 2022,

to protest on the income level received. The income received by the food delivery riders are said

to be inadequate in response to the high cost of living as delivery riders are paid a flat rate per

delivery and may earn additional charges depending on the time and distance of the order.

According to research conducted to survey financial health of Grab Workers in the Gig

Economy, the young Grab Workers aged between 15-24 years old tend to work for short hours

which results in lesser income and they do not spend within their means which results in

financial distress among them. This issue can also be applied in the global gig workers issue

where according to Forbes’s study, gig workers have little to no emergency funds saved up. The

workers are said to have only about $1,000 or less savings while more than 40% had no savings

at all. This scenario is also applicable in countries like China and Malaysia where according to

MetLife Foundation research, minority of gig workers in both country saves their earning. Only

less than half of gig workers are able to meet their daily commitments which includes paying

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bills and debts on time as well as purchasing essential goods. While in China, only 22% of gig

workers had savings for emergency use. Almost 80% of the gig workers had to borrow money

just to meet their essential needs for daily life usage, and this addresses the seriousness of this

issue.

The COVID-19 pandemic had the highest impact on gig workers' financial status,as men

experienced income reduction and felt strain on financing basic needs. We can use the Income

Effect to explain further regarding this scenario. Income effect explains the relationship between

income of an individual with its consumption level of goods and services. Generally, as the

income of an individual increases, the purchasing power of the individual increases which causes

the consumption level of goods and services to rise which is due to higher level of disposable

income and savings. A reduction in gig workers’ income also leads to less disposable income

which also decreases their purchasing power and consumption level. As an example, low-

income households experience financial difficulties the most when their expenses exceed their

income earned or savings. This is because gig workers earn relatively less than non-gig workers

and most of the gig workers have to bear their gig expenses on their own. This issue also has an

adverse impact on the country’s economic growth where lower consumption level leads to a

lower GDP (Gross Domestic Product) of a country.

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3.0 Wellbeing of Gig Workers

3.1 Financial Protection

The scope of gig work has grown since companies began employing people who were

willing to work part-time or on a contract basis to meet their talent demands. However,

increasing reliance on gig workers at a time when most of the gig economy is still unregulated

and unchecked could have a huge wallop on gig workers' well-being. When the well-being if

workers aren’t taken care could lessen the motivation of gig workers which will lead to poor job

performance that is associated with higher rates of absenteeism, turnover which could highly

impact the organization in terms of management and cost it needs to bear.

Modern study on workplace well-being has recognised that, particularly considering

technical, social, economic, and demographic changes, organisational responsibility for

employee well-being is fundamental. For gig workers, maintaining a sense of wellbeing and

making choices to accomplish it are crucial.

Firstly, employers can provide financial security to gig workers to boost their well-being.

For example, employers can provide health insurance, professional development programs and

compensate their workers as a financial protection. Since the COVID-19 pandemic affected a

large number of gig workers, employers can provide health insurance to them. For instance,

giving gig workers 14 days of sick leave if they are unable to work and pay the cost of COVID-

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19 checkup. Employers may also offer health services to gig workers, such as paying for hospital

treatment.

Furthermore, companies should finance the cost to provide some professional

development programs to their workers. Companies might provide coaching and training to

enhance the skills of their employees. Employers need to give employees all of the tools they

require to perform their duties. Employers are responsible for ensuring that their staff members

are treated with respect and dignity at work and possess transferable and current skills.

In addition, employers should offer compensation to their workers as a financial security.

To illustrate, companies should provide Social Security Organisation (SOCSO) and the

Employees Provident Fund (EPF) to their workers. It provides benefits to workers and their

dependents in case of any emergency. Thus, the workers' safety will be more secure. According

to Aon’s 2020 Gig Economy report, programs and offerings that support flexibility and empower

employees, such as flexible benefit training and financial wellness programs, are essential to the

human workplace.

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3.2 Safety Net Issues

As gig workers, they may have done their best to adapt to the new workplace in order to

avoid causing problems, but unfortunate and odorless there are situations when the problem is an

unavoidable workplace accident. However, accidents could be avoided if everyone in the

company, especially the employees, were aware of common workplace safety issues and

collaborated to develop and manage occupational health and safety requirements to make the

workplace safer. Therefore, in the workplace, every employer should prioritize safety in order to

protect the property, employees, customers, clients, vendors, suppliers, and other stakeholders.

According to the Department of Statistics Malaysia Official Portal, 1.43 thousand people in the

Malaysia states were injured in non-fatal workplace accidents in 2021.

One of the safety issues identified is a lack of proper safety induction, which can lead to

injuries to employees (Health and Safety Executive, 2019). Therefore, every employer and the

employees, especially the gig workers are responsible for developing (and revising as needed) an

existing safety and health policy, and the policy should be implemented within the organization.

Administrative levels, safe working environments, fire safety, safe use of chemicals, safe use of

electricity, safe use of tools, and proper personal protective equipment are some of the policies

that both employers and the gig workers need to follow to ensure a safe workplace. These

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policies were developed to provide employees with safe work practices training and education in

order to facilitate for new employees to understand the rules and avoid potential accidents.

Furthermore, every employer must update their company policy whenever there are changes in

the workplace so that everyone involved in the organization is more aware of workplace safety.

In addition, in every workplace where minor injuries may occur, every employer must

provide safety equipment such as a first aid kit equipped with emergency medical supplies so that

employees can use it in an emergency before being transferred to a hospital. Besides, fire

extinguishers and hoses must also be installed and inspected on a regular basis by each company

so that they can be used safely and prevent the occurrence of fires. Also, each employer must

provide personal protective equipment (PPE) such as goggles, gloves, socks, hats, and protective

lotion to their employees that work in factories. Aside from emergency equipment, the tools and

machines at the workplace should be ergonomically designed and easy to use to ensure a safe

working environment. For instance, stores should be organized and labeled, and the path used by

employees while carrying out their duties should not be obstructed or narrowed. To provide

employees with comfort, employers must also provide common facilities such as toilets,

changing rooms, rest rooms, and etc.

In conclusion, employers must understand that the time they work is different from the

time they work in the office, as they are the gig workers. As a result, employers must adapt to

new communication styles and adjust availability expectations. A blended workforce is a unique

and evolving workplace dynamic, but if managed properly, it can increase the bottom line

between the employer and the employees. The employer also should make their gig workers feel

like they are a part of the team by getting to know them and seeing the needs of each project

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through their perspective, quality work, longevity, so appreciation for working relationships will

be returned to the employer (Zgola, 2021).

3.3 Minimum Wage

Gig workers all over the world have been facing the same problem which is inadequate

income earned to continue their living. This issue was also raised by the Malaysian gig workers,

especially food delivery riders who held up strike for a day in demand for a fair income payment.

Hence, the government as well as companies for whom gig workers work should introduce a

minimum wage for gig workers according to the respective industry to ensure the gig workers

have a stable income.

There is no minimum wage range for the gig workers as they are not defined as employers

under the Malaysian Labour Act 1955 (Act 265). The minimum wage range set for the gig

workers should be around RM 1,800 in accordance with the higher cost of living after the

pandemic as our country faces inflation which causes goods and services prices to be escalated.

Most gig workers earned their salary based on the number of days worked and the number of

deliveries or trips made for food delivery riders and drivers. These gig workers will not receive

payment for the days not worked which is highly unfair as it will be harder to survive in the

unprecedented times. The current minimum wage of workers is below the living wage in Kuala

Lumpur which affects the spending power thus living quality of gig workers.

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Hence, the Local and State Government should work together and determine local

minimum wage. This is because cost of living differs in the urban and rural states therefore both

the government bodies should set a local minimum wage to ensure the wages are compatible with

the living costs. Apart from that, most importantly the government should classify gig workers as

employees to be entitled to receive such rights. To illustrate, the UK Supreme Court has filed for

Uber drivers to be classified as gig workers.

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4.0 Conclusion

In conclusion,the gig economy has a legitimate position in modern society. It enables workers

to pick a flexible work schedule, which is not always possible with full-time employment.In light

of the increased expansion of the service sector and gig economy in general, the legal authorities

should offer careful analysis and investigation to guarantee that this human labor community has

at least moderate employment rights.In light of the increased expansion of the service sector and

gig economy in general, the appropriate authorities should offer careful study and investigation

to guarantee that this human labor community has at least the bare minimum of employment

rights.

One of the primary issues for gig workers is job benefit,social protection and skills.

Some recommendation that can be suggested is increasing initiatives that assist gig economy

employees in matching with varied platform providers based on their particular abilities, as well

as upskilling to give alternative gig job alternatives which is short term policy

recommendation.As a result, it is advocated that programs be developed to assist employees in

the gig economy in matching with various platform providers based on their different abilities, as

well as developing skills to give alternative gig-job choices.Millennials in the labor field make up

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the majority of today's population. They are establishing the new normal in the modern

workplace by virtualizing many previously physical encounters. To preserve the welfare of gig

workers, governments should adopt gig economy employment laws or standards in terms of work

licenses, taxable income, and social safety nets.

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