KUALA LUMPUR: The rate of informal employment in Malaysia for all groups of workers has been declining over time and stood at 26.8 per cent in 2022.
This translates into about 4.1 million workers, according to a report by the World Bank.
The "Informal Employment In Malaysia" report said the country's informal employment is projected to decrease to 21 per cent of total employment by 2040 if productivity growth is high.
The projections made by the World Bank show that informal employment is likely to persist over time, although the extent of informal employment will depend on the growth of total factor productivity, and the relative growth of labor costs.
"The higher the growth of total factor productivity relative to the growth of labor costs, the smaller the projected share of informal employment, and the higher the GDP growth," said the report.
Based on the rate of informal employment, the report said the number of informally employed workers in 2022 is estimated to be 4.1 million.
When agricultural workers are excluded, it said the number of informally employed workers in 2022 is estimated to be 3.2 million.
"There is also some indication that informal employment is higher in Malaysia than in aspirational high-income countries, but lower than in regional peer countries," it said.
However, among all informally employed workers, the subset of gig workers, and particularly location-based gig workers has been increasing in number, as indicated by data from MDEC.
It is likely that many of these workers have other jobs; for instance, 68.9 per cent of the GLOW workers surveyed reported having another job outside of freelancing, said the report.
Moving forward, the report said Malaysia can enhance the protection of informally employed workers by a combination of measures to increase the coverage of social insurance, leverage private sector instruments, and extend social assistance coverage.
Malaysia can take steps in the short, medium and long terms to comprehensively enhance the protection and productivity of informally employed workers.
"Existing programs for skills training can contribute further to increase the productivity of informally employed workers.
This will enhance the content and suitability of training curricula, offer relevant modular training through active labor market programs, and update and calibrate training content and practices based on continued evaluations," it added.