New scheme needed for gig workers

Govt needs to introduce new laws or a group insurance scheme that would allow for EPF and Socso contributions

by NUR HANANI AZMAN/ pic by ARIF KARTONO

THERE is an increased awareness of the need to provide more protection to gig economy workers among industry players, said Malaysian Employers Federation ED Datuk Shamsuddin Bardan.

Shamsuddin highlighted that the fundamental lack of social protection can be addressed by creating awareness and promoting best practices among various stakeholders of the gig economy.

“The government needs to introduce new laws or a group insurance scheme that would allow such independent workers to contribute towards the Social Security Organisation (Socso) and the Employees Provident Fund (EPF),” he said.

He added that the main question now is the level of discipline of the gig workers themselves. Even with the self-employed scheme available at Socso, the take-up rate is still low.

“There is no employer-employee relationship in the gig economy. Gig workers need to have dedication to contribute to the EPF and Socso.

“I think companies like Grab Malaysia and Foodpanda Malaysia Sdn Bhd have to be more strict and only allow those dedicated to contribute to the EPF and Socso to join them,” he told The Malaysian Reserve (TMR) recently.

In response to Covid-19, Grab Malaysia introduced Grab “Partner Protection Fund” of up to RM1,000 per driver or delivery-partner.

The company has set up a protection fund to help partners who are either tested positive or are required by the Ministry of Health to self-quarantine.

Grab’s “Partner Relief Fund” of up to RM300 per driver or delivery-partner is also being offered to provide active partners with vouchers to help them with daily household expenses.

With this move, Grab Malaysia has tacitly acknowledged its drivers and riders who are wholly dependent on its platform for their income.

Presently, Grab Malaysia does offer EPF contributions of 5% on the amount contributed by selected driver-partners, subject to a maximum of RM80 a year. Both the EPF and Socso also allow gig workers to contribute voluntarily under their Voluntary Contribution with Retirement Incentive and Self-Employment Social Security Scheme respectively.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said gig workers have to think about their own social safety net in the long run.

“They need to have long-term savings such as EPF and insurance like Socso. Gig economies need to have a formal arrangement so that their welfare may not be worse off compared to their other counterparts.

“So, they need to talk to financial consultants. That’s another area. It’s very service-oriented and knowledge-based,” he told TMR.

The gig economy is poised to become an essential employment sector as demand for related services is expected to remain high even after the authorities are able to tame the spread of the coronavirus.

The sharing economy’s flexibility and low barriers to entry have long appealed to workers who can decide when and how much to work to earn extra income.

The Centre, a research organisation, found gig workers prefer automatic deductions with matching contributions by gig platforms rather than voluntary social protection schemes.

Based on its survey, 59% do not have emergency savings and 59% do not have retirement/old age savings — a significant majority.

“In terms of insurance, 75% of gig workers do not have unemployment insurance, 57% do not have personal healthcare insurance and 37% do not have work-related injury or accident insurance.

“Very importantly, 22% or close to one-fifth of 400 e-hailing and delivery drivers surveyed do not have any form of social safety net at all,” it said.

Financial literacy efforts are well and good, but humans are mostly present-biased, preferring immediate gratification if given a choice, according to The Centre.

“Automatic enrolment in earnings deduction schemes, with an opt-out option for those who have existing plans, would be much more effective.

“And automatic enrolment is particularly feasible via gig platforms with their developed back-end infrastructure,” it said.