This will ensure the best fit for the specific needs of these groups, economist Madeline Berma said in her presentation of the World Bank Group’s “Malaysia Economic Monitor” for December today.

Berma said that when looking to empower rural communities, policymakers should look at the systems already implemented by these communities, rather than impose “alien” concepts that they may not be comfortable with.

“These communities know their problems and how to solve them. Gone are the days when the academics and the government can act as if they know everything.

“For example, among these communities, they have the ‘kutu’ (tontine) system. In developmental economics, we call it a ‘credit rotation system’,” she said, referring to the mechanism by which people make monthly contributions to a single informal association from which they take turns to redeem, or “borrow”, the sum collected.

“This system has not been fully developed, but it’s a system the community understands. But what do we do? We come up with a new system that is considered ‘formal’ that is alien to the community,” she said.

Permatang Pauh MP Nurul Izzah Anwar said while amendments to existing employment laws were encouraging, there may still be a need for new laws to better cater to the individual needs of informal sector workers like those in gig industries, the self-employed and independent contractors.

“With such laws and policies, we can better protect them and utilise whatever means that they feel most comfortable with.

“If self-employed workers in the gig economy say they prefer day-to-day contributions rather than monthly ones, the system must be flexible to meet this need,” she said.

Nurul Izzah said this burden was not only for the government-run Social Security Organisation (Socso) to shoulder.

“The private sector also has a role to play in allowing for the needs of the informal sector workers they hire to be met,” she said.

Employment trends

World Bank Group lead economist Apurva Sanghi noted that while the unemployment rate had declined, the under-employment rate remained elevated, which is related to those working fewer hours than before or working below their qualifications or skill level.

Apurva said the under-employment issue in the country was due to the underutilisation of the labour force, mismatch in skills, rise of informal and gig economy as well as lack of affordable childcare.

World Bank Group senior economist (poverty and equity) Ririn Salwa Purnamasari said new entrants to the job market during the pandemic were more likely to have entered the informal workforce, referring to fresh graduates having to take up jobs providing delivery or e-hailing services.

However, she stressed that the informal workforce tended to be precarious and less remunerative.

“Informal workers are more likely to experience a reduction in income and less social protection. To sustain the income loss, these informal workers may adopt harmful coping strategies, such as reducing food consumption and selling assets,” she said.