Referring to the article in news portal Free Malaysia Today titled “Freelancers in ‘gig economy’ need EPF-like scheme too” published on Oct 14, there is definitely a need for freelancers or workers of the Fourth Industrial Revolution to have Employees Provident Fund (EPF)-like schemes for old-age savings.
However, there is more than this to retirement savings. Perhaps there is a need for a holistic social protection approach for the gig economy. Although Malaysia has many social protection laws which provide for the formal sectors, there are gaps in this new industrial revolution. Hence, there is a need for a contributory social protection scheme for these freelancers for workplace injuries, accident protection and other contingencies.
Social insurance is equally important to old-age security schemes like the EPF. This is because, for example, should there be an accident resulting in permanent disability, a worker in the gig economy will not benefit from any social insurance. To make this worse, if such a worker can no longer work, he or she will not even be able to save any money in the EPF which will likely see this worker being pulled into old-age poverty.
Malaysia has the Self-Employment Social Security Act 2017 (Sessa), which was enforced by Socso from June 2017. This law should be the platform to provide a social safety net for workers in the gig economy.
Initially, the scheme under Sessa covered self-employed taxi drivers and those providing similar services such as e-hailing. However the take-up rate is low. As of Oct 14, 5,192 out of 100,000 self-employed taxi drivers had registered and contributed to Socso.
Therefore, the regulations on e-hailing services will be gazetted soon and take effect on Nov 1 whereby all the drivers contribute and will be covered under Sessa.
Socso is expanding the coverage of Sessa to other informal sectors, based on a directive from the government which will eventually cover workers in the gig economy.
Despite that, Sessa only covers work-related accidents. More coverage should be given to workers in the gig economy, including protection against diseases as well unemployment.
If freelancers become permanently incapacitated due to disease, there are no schemes by Socso or EPF to protect them. These self-employed people, including those in the gig economy, are not protected from economic shocks which may cause them to lose their jobs and the ability to earn an income, either. Formal workers, meanwhile, are covered by Socso’s Employment Insurance System.
There is a need to explore new schemes for those who are currently not covered by any social insurance. Deputy Prime Minister Dr Wan Azizah Wan Ismail recently highlighted that there are 13.7 million people in the informal or freelance economy – almost double the number of workers in the formal sector, who are registered with Socso. Imagine if an economic shock were to happen in Malaysia and these workers are without any social protection.
Therefore, let us view social protection from a bigger perspective to ensure that all workers, formal or informal, or perhaps even all Malaysians, will be covered by social protection from all kinds of shocks or contingencies.
M Kulasegaran is the human resources minister.
The views expressed are those of the author and do not necessarily reflect those of FMT.