Proposal for New Regulations for Uber Drivers Threatens Social Security Stability in Brazil

Proposal for New Regulations for Uber Drivers Threatens Social Security Stability in Brazil
Photo: Getty Images 11.06.2024 492

Government experts warn that the plan is actuarially “unsustainable”.

Despite ongoing discussions about the necessity of reforming Social Security to address its escalating deficit, the Lula administration has proposed legislation to regulate “four-wheeled vehicle app drivers” such as Uber, 99, and InDrive, aiming to integrate them into the social security system. However, the cost implications for the public finances remain unclear.

In Congress, government officials conceded that the bill is “actuarially unsustainable” yet proceeded to fast-track its vote. The proposal was advanced without short-term financial projections and, according to responses obtained through the Access to Information Act (LAI), it lacks any long-term impact studies on Social Security.

According to data from the Brazilian Institute of Geography and Statistics (IBGE), in 2022 there were 778,000 people in the country whose primary occupation involved passenger transportation apps.

The proposed legislation establishes a formal category for app drivers, setting a minimum hourly wage of R$32.09, along with mandated social security contributions—1.8% from the worker’s income and 5% from the company, and rules for exclusion and suspension of platforms. This inclusion in the National Social Security Institute (INSS) entitles drivers to benefits such as retirement, death or disability pensions, maternity leave, and accident coverage.

The government has yet to disclose the potential cost impact of these contributions on Social Security expenditures, which surged by 17.2% last year, totaling R$306 billion. To illustrate, if each of the 778,000 workers were to receive the minimum INSS pension today, the annual cost would amount to R$14.2 billion.

The driver community is split between those advocating for Social Security affiliation to secure enhanced accident protection and those resisting the deduction of contributions from their earnings. The government has withdrawn its request for urgent processing, and the bill has been referred to committees, where drivers are lobbying for contributions to be optional or channeled through the MEI system, which allows for voluntary participation.

The growth of the gig economy has forced lawmakers, regulators and courts to determine the rights of workers at companies like Uber under existing labor laws. 

Brazil Labor Minister Luiz Marinho said that the legislation will bring legal certainty to companies that have faced at least 17,000 labor court lawsuits seeking to recognize the relationship between workers and platforms, according to Brazil’s attorney’s general office.

Sources:  Valor International, Bloomberg

digital markets  Brazil 

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