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The revolution of digital labor in the gig economy

KUALA LUMPUR, 28 July 2022 – Digital labor is one of the ways of increasing production in a company. Digital labor comprises of producing value through use of information and communication technologies including digital platforms and artificial intelligence.

Digital labor has been revolutionized in the recent business market to comprise of robotic process automation systems (RPA) and machine learning. The various digital labor platforms include on-demand platforms, user-generated data, and micro-working.

There are several reasons why digital labor has revolution and is being preferred by several people as a way of working in the society. Therefore, there exist advantages and disadvantages of digital labor in the business environment.

The main advantage of digital labor is the reduction of operational cost because using robots reduces the number of offshore workers in the firm. According to journal Organizations and Markets in Emerging Economies on the motivation to adopt e-commerce among Malaysian entrepreneurs, significant works in the company has been taken by robots and software systems. However, this also causes some technological niche since any error made by the software systems or robots will lead to massive loss or production of obsolete products.

The main reason why digital labor is preferred by companies is that it is cheap and has efficiency and accuracy rate. The cases of the systems and robots causing any error is minimal although they can occur. It is due to this reason that made to state that digital labor had formed part of our everyday lives and has enabled the ability of exchanging large amount of information. According to journal Competition & Change on digital labour platforms and new forms of flexible work in developing countries, algorithmic management of work and workers states that digital labor has provided new markets for businesses, generating more income for the workers.

Digital labor has led to connection of consumers and provided the need infrastructure to exchange work and compensation. Moreover, several business models have embraced digital labor, implying it is flexible. Digital labor has overtaken every business environment. There are some features of digital labor that makes if fit and suitable to be embraced by every business enterprise. According to journal Sustainability on digital labour in the platform economy, the case of Facebook, the presence of big data analytics in digital labor can provide companies with accurate forecasts and predict on the next consumer preferences based on the past data.

Moreover, digital labor does not only mean the use of robotics and AI in the production of goods and services. Part of the process include use of machine learning algorithm in making accurate decisions and prevention of clerical errors that can be made by workers performing the same operation. Therefore, it is the presence of big data analytics that makes digital labor possible to be used in making predictions. On the other hand, machine learning and AI has enabled the use of robotics easier and more accurate.

There also exist the dark side of digital labor with several authors stressing on the fact that Facebook and other commercial online media exploit their workers to earn large profits using targeted advertising.

This is not the only challenge facing digital labor in the market. Reinforcing geographic inequities is a situation where digital labor is concentrated in a few countries needing the economy to have digital infrastructure and internet-savvy population. This means that to make digital labor a success, it needs a good infrastructure and a place where internet services are available. Therefore, it limit other areas from using digital labor.

Moreover, there is also the risk of privileging other workers with favoring the highly educated men than women. It was discovered that 4 in 10 workers are women, with 1 in 10 workers being location-based workers and other remotely working. Here are other disadvantages like income insecurity, in access to workplace protection and compensation, lack of social security coverage, and lack of fundamental labor rights.

Despite all these disadvantages the digital labor economy has been increasing. According to World Bank, there were 48 million crowd workers in 2013, with 4.8 million people active. It was projected that by 2020, the number of crowd workers will have generated revenue services ranging from $15 billion to $25 billion. In Malaysia, the gig economy has grown by 31%, surpassing the conventional workforce based on the research by Employee Provident Funds figures.

Moreover, World Bank also established that 26% of the Malaysian workforce are freelancers, with the number continuously growing over time. This led to the development of the idea of “Digital Malaysia,” which described the nation’s vision of forging and embracing the global digital revolution propelling the country into a high-income status by using digital technology.

Work on the digital labor platforms has provided workers with the opportunity to work from any place and at any time and in jobs that suit them. However, there are some risks involved because digital labor is not recognized as a method of employment.

The figure shows distribution of digital/gig economy.

The figure shows distribution of digital/gig economy.

Therefore, according to Comparative Labor Law & Policy Journal on introduction crowdsourcing, the gig economy and the law, the workers have little control over their working conditions and experience minimum wages, reduced bargaining power, and government intervention. 66% of freelancers in Malaysia, as observed by the Department of Statistics Malaysia, did not have a retirement plan. In comparison, 33% did not have a personal financial plan, making the digital laborers face problems related to mortgages.

Therefore, despite the government’s initiative to promote the digital economy in the country, there are some problems relating to employee exploitation.

The figure below shows the growing rate of the gig/digital economy.

The figure shows the growing rate of the gig/digital economy

Moreover, according to The Edge Market, a case study of Malaysia in 2021 by Employees Provident Fund showed that approximately 4 out of 10 Malaysian workers will be gig workers in the next five years, double the worldwide average.

The gig economy is expected to increase in the country; despite the covid-19 pandemic, with the Malaysian economy realizing the growth of the digital economy. This has made the digital economy to be part of the main agenda of the Malaysian government because the digital economy will contribute 18.5% of the GDP in 2020.

This has made Malaysia allocate a budget of 12.6RM billion to develop the necessary infrastructure for Digital Malaysia to help the private sector. According to journal Post-Communist Economies on digital transformation-enabling factory economy actor’s entrepreneurial integration in global value chains, RM 10 million was allocated to training micro-digital entrepreneurs and technology experts.

Moreover, RM 20 million was allocated to the Malaysian Digital Economy Corporation to develop local people in creating digital content, including e-games, animations, and digital arts. This is Malaysia’s primary plan for developing the digital economy in the industry.

Therefore, there needs to be an initiative to promote digital labor in the economy because it was discovered that many people having enough education on providing digital labor earned more money than those who were still providing physical labor. This is because workers are capable of multitasking and taking more than two jobs from different firms at the same time.

Digital labor is the next best version of labor that seek to expand in the business to provide more diverse opportunities for people and workers seeking to change their careers.–THE MALAYA POST

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