This article first appeared in The Edge Financial Daily on July 8, 2019

KUALA LUMPUR: The government needs to recognise contribution from the rising gig economy, as technology plays an increasingly large part in the way we work today, said Damansara member of parliament (MP) Tony Pua, who is also the political secretary to Finance Minister Lim Guan Eng.

He acknowledged this is not an easy thing to do, citing as example the situation involving taxi drivers and drivers of e-hailing service providers like Grab as one of the biggest conflicts in the public space that represents the traditional economy versus the gig economy.

“I don’t think there is a one-shoe fits-all policy,” said Pua at a panel discussion on public policy at the Future of Works conference organised by the Alumni Alliance Association on Saturday.

“In the past, the knee-jerk response was to protect the taxi drivers of old, as we had about 30,000 taxi drivers. But things have changed completely in less than two years, where there are now 160,000 registered Grab drivers out there,” said Pua. This made the government realise it now has to think about the new Grab drivers too, he said.

The government’s role, he said, is not to ignore the situation, but to strike a balance between the interests of both sides, while facilitating the transition for those who wish to partake in the gig economy.

On that note, Pua said the government should look into policies that will make Malaysia more competitive in the future, where the gig economy is expected to play a greater role.

The challenge, he said, is for the country as a whole to transition from a protected environment to one where competition flourishes. “To future-proof ourselves is really to make us efficient [and] competent, to enable us to stand on our own two feet, so that we can compete with the rest of the world. These are the policies [we need] to get us there,” said Pua.

Bridging the labour-supply gap with ‘shared prosperity’

The challenge, however, continues to be the increasing gap between the labour supply the country is producing, versus what is needed in the marketplace, said Pua.

“A lot of them (graduates) don’t want to work because the minimum wage is not sufficiently attractive to them,” said Pua.

One suggestion from think tanks, he said, is for the government to intervene in the market by enabling shared prosperity to trickle down to the young graduates who are coming out of our education system, said Pua.

This would mean telling businesses to hire these graduates while the government provides some sort of incentive by way of subsidies or pay the companies’ Employees Provident Fund contributions for the new recruits.

“Those are elements the government has to think about, to intervene in the market, to ensure wealth is shared among the newer members of the workforce,” said Pua.

Rembau MP Khairy Jamaluddin, who also took part in the panel discussion, is of the opinion that there is still room for legislation in terms of minimum wage, adding that public policy has to be derived from what is a realistic living wage.

“[Having] minimum wage legislation is fine, but the minimum wage now is not a living wage, especially in the urban centres,” said Khairy, adding that data has shown that productivity has increased but wages have not risen in tandem.

“The median wage ... the ratio of the CEO’s (chief executive officer’s) salary to the average or median wage in many companies ... is too huge. There are not enough profits being distributed to workers.

“I feel that bigger companies should be paying more, and they can pay more. The minimum wage does not have to be a uniform minimum wage nationwide. It can be based on sectors, or the size of a company,” Khairy added.

Start with new government recruits, says Khairy

Meanwhile, the former youth and sports minister said the government’s role is not just about offering protection to those who are in the new gig economy, but to change the mindset of those in the traditional economy to accept a new concept of work for the future.

Khairy noted that the civil service bill — which accounts for the biggest chunk or 41.8% of the government’s total operating expenditure — is made up of salaries or emoluments, and pensions.

It has been reported that for 2019, public sector emoluments are expected to increase 0.88% year-on-year to RM82.05 billion, while retirement charges are slated to rise 3.1% to RM26.56 billion. Together, these two components would push the total civil service bill to RM108.61 billion, over one third or 34.5% of the entire budget for 2019 of RM314.5 billion — versus just RM54.7 billion or 17.4% of the budget that is allocated for development spending.

“The civil service in Malaysia, as it is in many parts of the world, gives pensions for life. Considering that the next 30 years will see longevity and life expectancy go up, we will be paying pensions for a longer period of time,” said Khairy.

In the face of this, Khairy pointed out that there are many tasks that can already be automated, though it is hard to make them so “because you want to respect the social contract with civil servants”.

“[However], in the future, we will increasingly be able to give out civil service jobs to either automation or contingent workers,” Khairy added.

To tackle the future affordability of the civil service bill, the government has to start thinking about the transition to automation or contingent workers with new recruits, as well as trimming benefits that civil servants get.

The new recruits cannot possibly enjoy the same benefits as existing civil servants as the government would not be able to afford these later, Khairy said.

“If it is one-third of the government budget today, with longevity and pensions, it (the bill) will only grow bigger and the fiscal room for the government — to use the money for other things — will become much, much less,” said Khairy.