Is the Gig Economy in Malaysia Dying or Evolving? Here’s What Budget 2026 Reveals
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A few years ago, the gig economy in Malaysia was seen as the next big thing in the working world. Driving for Grab, delivering with Foodpanda, freelancing as a designer or tutor, or taking on virtual assistant gigs suddenly became symbols of freedom, the kind that promised both income and independence from the rigid nine-to-five grind.
After the pandemic, this wave only grew stronger. Thousands of Malaysians turned to gig work, some out of financial need, others drawn to the idea of flexibility and extra income. For a while, it felt like this was the future of work.
Fast forward to 2025, and that optimism feels a little dimmer. The realities of higher living costs, tighter rules, and unstable earnings are starting to sink in. Many gig workers are beginning to ask themselves if the industry is still growing or if it has quietly hit its peak.
The rise of freelancing and gig work in Malaysia
According to a World Bank Malaysia study, nearly one in four Malaysian workers has engaged in some form of gig or informal work. During the COVID-19 lockdowns, online delivery and freelance platforms became lifelines for many. In 2021 alone, Grab reported over 300,000 active driver-partners, while platforms like Upwork and Fiverr saw a surge of Malaysian users offering digital services.
This shift wasn’t just economic; it reshaped our culture of work. The gig economy in Malaysia created a pathway for young adults to earn quickly without formal employment, retirees to supplement their income and women to balance home and work more flexibly. For a while, it looked like this flexible labour model would become the new normal.
Why the gig economy boom is slowing down
Fast forward to 2025 and the story is more complicated. The same factors that drove the boom, such as low entry barriers, flexible hours, digital platforms, have now created an oversupply of gig workers. Competition is fierce and average pay has dropped significantly. According to DOSM’s informal sector data, the median monthly income for informal workers in Malaysia stands around RM2,000, far below the national median of RM3,600.
Inflation and rising living costs have made things worse. Gig workers face the same fuel, food and rental hikes as everyone else but without fixed pay, benefits or job security. Many are discovering that flexibility comes with a heavy price tag.
In the 2024 Bank Negara FCI survey, only 58% of Malaysians reported that they make a habit of saving for the future, the lowest proportion recorded, a trend that likely hits gig workers hardest given their inconsistent income streams.
Policy updates – Budget 2026 and the future of gig work
The government has been aware of these cracks. Malaysia’s Madani Economy framework and Budget 2024 included measures to strengthen the social safety net for informal and gig workers. EPF’s i-Saraan scheme, for example, allows self-employed individuals to make voluntary contributions with government incentives of up to 15%, capped at RM500 annually.
Similarly, Socso’s Self-Employment Social Security Scheme (SESSS) offers protection for accidents and injuries on the job. Yet, participation rates remain low — less than 20% of gig workers are registered, according to SOCSO’s 2025 data. Many cite low awareness or affordability as barriers.
The original i-Saraan remains in place, providing RM 500 per year (RM 5,000 lifetime) for voluntary contributors. In addition, under the new Gig Workers Act 2025, contributions to the Self-Employment Social Security Scheme (SKSPS) will now be mandatory for gig workers, while the government will subsidise contributions by 70% in the first year and 50% in the second year for those in non-mandated sectors. These reforms mark a major step toward formalising social protection for Malaysia’s growing gig workforce.
Without consistent savings or insurance, gig workers remain vulnerable to economic shocks. When a food delivery rider’s motorbike breaks down or a freelance graphic designer loses clients for a month, there’s little financial cushion to fall back on.
Budget 2026’s measures aim to close some of these gaps. With mandatory SOCSO coverage and enhanced EPF matching incentives, gig workers now have more accessible pathways to build retirement savings and access protection for work-related accidents or income disruptions. However, awareness and enforcement will determine whether these safety nets reach all active gig workers.
Adapting to a changing gig economy
Still, it’s not all doom and gloom. The gig economy in Malaysia is not dying. It’s transforming. The low-skill delivery and transport sectors may be plateauing, but high-skill digital freelancing and remote work are gaining traction.
Platforms like Workana, Fiverr and Upwork are now seeing a rise in demand for specialised services from video editing and UX design to content writing and data analysis. Malaysian freelancers who invest in upskilling and digital literacy are commanding higher rates from international clients.
In line with this, Budget 2026 also allocates RM 3 billion through HRD Corp for training and upskilling programmes, including Technical and Vocational Education and Training (TVET) and digital competency courses. This provides opportunities for gig workers to upgrade their skills, improve their earning potential and move into higher-value segments of the freelance market.
The Malaysian government’s National Digital Economy Blueprint (MyDIGITAL) also pushes initiatives to digitalise small businesses and train more freelancers under programmes like eRezeki and GLOW (Global Online Workforce). These may become the next growth engines for a more sustainable gig model.
The road ahead for Malaysian gig workers
For many Malaysians, gig work began as a side hustle but became a primary source of income. Today, as the economy tightens, the cracks are clearer, lack of pension savings, limited access to loans and income instability.
Gig platforms still provide vital income opportunities for thousands, but treating them as long-term careers may no longer be viable without proper planning. Experts often recommend gig workers set aside at least 20% of their earnings for savings and insurance contributions. Combining gig work with other income sources like part-time jobs or online businesses can also improve resilience.
Ultimately, the gig economy Malaysia isn’t dead. It’s simply maturing and that means fewer quick wins and more need for strategy. For those who adapt by learning new skills, diversifying income and planning ahead, the gig economy can still be a powerful tool for financial independence. But for those chasing short-term gains, the “freedom” it once promised may now feel like a trap.
Also read: Malaysia’s Budget 2026: What You Need to Know
The road ahead
The next phase of Malaysia’s gig economy will likely depend on three things: regulation, innovation and worker adaptability. With the Gig Workers Act 2025 and the new i-Saraan Plus incentives introduced under Budget 2026, Malaysia is already moving toward more formal protection and portable benefits for gig workers. If effectively implemented, these reforms could help transform gig work into a more sustainable employment model.
