16
Brazil - The extension of the General Social Insurance Scheme
However, and as noted by Alves Rangel et al. 2009, the social security system has always been connected to the labour market for employed workers, which jeopardizes the
coverage of some groups with special features, as in the case of rural and own-account workers.
Taking the above into account, there was a development of proposals and initiatives with the aim of offering and increasing social protection coverage to such groups. Below,
we explain some of the measures which stood out among those implemented so far.
4.2.1. Differentiation of contributory categories
According to the criteria established by the Brazilian National Institute of Social Security, there are different categories contributing to social security determined by the
contributors work situation, and adapted to his or her employment characteristics. Special emphasis must be given to the categories of
―employed worker‖, ―individual contributor‖, and
―special insured‖. Own-account or autonomous workers are included in the ―special contributor
‖ category, whereas rural workers are included in the category of the ―special insured
‖. Regarding the importance of both groups, it is known that informal work is one of the
characteristic features of the Brazilian labour market, reaching over 30 per cent of the EAP for the period between 1981 and 2007 Alves Rangel et al., 2009.
According to recent data by the Social Welfare Ministry, Brazil has a population of 189,952,795 people, of which 92,394,585 49 per cent belong to the working EAP. The
composition of the working population is led by employed workers 59 per cent, with the second largest group being own-account workers 20 per cent, which shows the latters
importance within the Brazilian labour market structure.
Table 2. Brazil: Labour Market Structure, 2008
Category People
Employed workers 54 187 086
59 Domestic workers
6 626 001 7
Own-account workers 18 688 789
20 Business owners
4 143 956 4
Other categories 4 161 275
5 Unpaid workers
4 587 478 5
Total of Working Population 92 394 585
100
Source: Social Welfare Ministry, 2008b.
a Individual Contributor
This contributor category includes independent workers own-account workers, which are considered to be one of the most sensitive groups as regards social security
coverage. This category is part of the Social Security Simplified Plan, which provides protection for all workers with an income below 36,000 Rper year US 21,500.
With the aim of adapting social protection systems to these workers, some benefits were introduced such as the reduction of the minimum contribution, which in the particular
Innovations in extending social insurance coverage to independent workers
17
case of individual contributors was reduced from 20 per cent to 11 per cent of the minimum monthly salary. It is important to note that each individual contributor may
decide on the contribution percentage to be paid. The key difference is that those who choose the reduced rate are not entitled to a retirement pension for years of contribution to
the system, unlike those who choose the 20 per cent rate, who enjoy all the benefits of the Brazilian social protection system. Another facility brought about by the systems reform is
the fact that contributors may change their contributory option whenever they deem necessary, with the only condition that the 11 per cent rate contribution periods have no
influence in obtaining benefits when determining contribution time.
b Special Insured
The special insured are workers performing their activities in rural areas and family companies, and with no permanent employees, such as small farmers, artisanal fishermen,
miners and indigenous people, among others. The main innovation regarding this group is the contribution based on the value of
production sales, which is a mechanism allowing workers to equate their contributory obligations to their income, which is generally irregular. The percentage of the established
contribution corresponds to 2.3 per cent of the gross sales of their production.
The beneficiaries of this scheme, which was established in 2008, receive the same benefits granted to contributors in other categories through the General Social Welfare
Scheme. As an added benefit, they are ensured access to such benefits in times of low productivity or in case of crop or production loss for any reason.
This scheme grants retirement pensions at 60 years old in the case of men, and at 55 years old in the case of women, for an amount equivalent to the national minimum salary.
This benefit is subject to 15 years of rural activity.
4.2.2. Granting of incentives to small and medium companies
Another element related to social insurance inclusion and coverage extension is the incentive package for small and medium companies, called Simples programme, and
subsequently renamed Super Simples. The aim of this measure is to reduce informality in Brazilian companies, which
directly and simultaneously affects workers employment and coverage situation. Generally, such incentives can unify, simplify, and ease the tax collecting procedure. Such
measures increased the formalization of small companies, and promoted the creation of new employment contracts, and, consequently, improved the inclusion of workers in the
social protection system.
a Simples
The Simples Integrated System for Payment of Taxes and Contributions of Micro and Small Companies was created in 1996 with the aim of formalizing employment and
social security in many small and medium companies. The system allowed the unified payment of some federal taxes and of social security contributions. This established a
single fee, based on a progressive scale of annual sales. This participation fee was based on gross sales, not on profits. Furthermore, this measure introduced the demand that such
companies had accounting management books.
The law defines micro-companies as businesses with a turnover above 240,000
Brazilian Reals, based on the annual sales limit, and small companies as businesses with a turnover above 2,400 Brazilian Reals.
