Pratiques de régimes de sécurité sociale pour les travailleurs domestiques

This page systematizes a set of international practices based on the experience of countries with positive results in terms of the extension of social security for domestic work. A systematization of this nature can serve as a reference for other countries wishing to advance in the improvement of their social protection for domestic work. For such purposes, the identified practices are classified into five categories, namely:

1. Aspects of institutional organization;
2. Financing issues; 
3. Affiliation and promotion of coverage;
4. Collection and recovery of contributions.

 

1. Aspects of institutional organization

Mandatory coverage. Domestic work is an activity which has a relatively high complexity in terms of affiliation functions. International evidence suggests that the mandatory nature of the affiliation plays a key role in the field of strategies for extending coverage. It estimated that 89 percent of countries with some form of social security coverage for domestic workers implemented mandatory coverage; in fact the highest rates of effective coverage directly correspond to the mandatory nature of the coverage.

However, the mandatory coverage for domestic work is far from sufficient to achieve satisfactory levels of social protection measure. In practice, experience suggests that the obligation is required to be accompanied by a set of complementary measures, most of which are outlined below.

Interinstitutional coordination. International experience suggests that coordination among the institutions responsible for implementing social security in its different functions, is an piece important to guarantee certain levels of effectiveness.

Among the positive outcomes associated with greater interagency coordination can be mentioned: simplifying administrative procedures, increased administrative efficiency and effectiveness (including in terms of reducing the costs of administering the system), greater transparency in the programs management and access to information to refine the design of strategies for extending coverage (ILO, Schwarzer et al, 2014). Interagency coordination is, therefore, a necessary though again not enough to achieve the objectives of coverage of domestic work.

There are countries where they have been implemented clear mechanisms for coordination between the institutions responsible for the administration of social security with other state entities such as ministries of labor, social development, finance, migration, gender equity or equivalent statistics institutes, among others. It highlights in particular the cases of Argentina, which shows a strong link with the ministry of finance; Uruguay and Singapore, with the ministry of labor; Costa Rica, with institutions linked to migration processes for negotiations with migrant domestic workers; among others.

 

2. Financing issues

Differentiated contribution. The affiliation for domestic work sector to social security institutions presents great challenges, primarily because the terms in which they occur in practice labor relations; unlike other types of paid work, a home or a particular person assumes the role of employer.

Because of this and other conditions, it is essential that social security institutions are using different strategies to cover domestic work. In this sense, the creation of incentives for affiliation, through various mechanisms can provide favorable results in terms of expanding the effective coverage. In terms of financing, one of the most widely used strategies is the establishment of a separate scheme contributions, usually benefiting the domestic work sector with a contribution minor compared to other employees, but it does not affect the type or amount of benefits that received domestic workers.

Differentiated contribution scheme applies primarily through two mechanisms: 1) reducing the percentage of contribution or the amount of contributions to the various social security schemes, as in Costa Rica or Israel or 2) creating a specific contribution scheme for domestic workers. In the latter case, some systems calculate contributions on the basis of an hourly wage, as in Argentina or Italy.

Contribution by hourly wage. Domestic work unlike other activities has a large population that works usually for hours or part-time. These circumstances led to the institutions see the need to adjust contribution schemes to facilitate the process of inclusion of social security, particularly when it necessary have certain minimum criteria for funding.

The application of traditional models of contribution to the specific case of domestic work, can become a strong barrier for many employers and workers. Therefore, some countries like Argentina and Italy have implemented contribution schemes based on the hourly wage or at intervals of hours worked.

In Italy, the Istituto Nazionale della Previdenza Sociale (INPS) establishes a contribution scheme based on hourly wage ranges (see table). It is a differentiated system with respect to that applied to the majority of Italian employees who contribute based on actual wages reported and with a contribution rate that exceeds 40 percent of salary; a contribution that it is difficult to reach for many employers and workers.

Italy. Contribution scheme for domestic work based on the hourly wage, 2015. In euros

For example in the Italian case if in 2015 the domestic worker earned 10 euros per hour, the contribution rate for each hour worked was 1.91 euros, to be paid shared out between the worker and the employer. In the scheme, the higher the hourly wage received by the domestic worker, the contribution rate is higher, creating a progressive system in the financing of benefits.

The INPS in Italy also established an additional category of contribution for domestic workers who work more than 24 hours a week, for which applies a lower contribution rate for the cases mentioned above. The existence of this category seeks to create incentives for employers to hire more hours during a week.

Contribution according the domestic workers age. Some social security systems have chosen to implement differentiated contribution schemes with contribution according to the age of the worker.

The application of such differential mechanism creates a solidarity scheme according age, where young workers contribute on a higher contribution rate, compared with workers who are nearing retirement age. This measure seeks among other things the creation of incentives for hiring domestic workers older, who are usually displaced from the labor market for younger work, primarily for productivity.

The use of the mechanism according to the age differential contribution may vary from one system to another. For example, in Singapore, the Central Provident Fund (CPF) established a contribution scheme based on seven age ranges, ranging from 35 years or younger to workers over 65 years of age (CPF, 2014). For the first interval overall, contribution rate is 36 percent (16 percent is paid by the employer and 20 percent by the worker), while workers over 65 years of age are benefited from the application of a much lower rate of 11.5 percent (6.5 percent paid by the employer and 5 percent working).

Similarly, in Argentina, the Argentina National Social Security Administration (ANSES) established a distinct contribution scheme for domestic work, which combines a scheme of hourly wage and a scheme based on the working-age (see the next table). This scheme is not using contribution rates but contriución absolute amounts stated in Argentine pesos. Also, contributions are paid by employer.

Argentina. Contribution scheme for domestic work based on the hourly wage and the age of the worker. Argentine peso

ANSES defines three age groups: over 18, under 18 and over 16 years and retired workers. In this scheme, there is no differentiated contributions, but there are age groups that are not incorporated into specific schemes; for example, those under 18 are not included in the pension system, and retired workers are not incorporated in the health system.

Contribution according to family composition. An innovative measure related to financing is differentiation according to family composition of home of workers. In this mechanism, the contribution may vary depending on whether the employee has a spouse or children.

In Uruguay, the National Health Insurance defines a contribution that depends on the composition of the domestic workers home. In this case, the contributions to the system are greater when the domestic worker has a spouse and when you have children (ILO, 2013).

State subsidies. An increasingly common practice employed in social security institutions, both developed and developing countries, is the application of state subsidies.

State transfers may be directed to subsidize the contributions of all and household or only those workers with low contribution capacity. In the latter case, the level of subsidies varies inversely related to ability to pay, that is the lowest-income workers (and their employers) benefit by receiving a higher percentage of subsidy. This strategy requires effective measures of tax control, to prevent employers conduct an underreporting of wages in order to improperly benefit of subsidies.

In any case, the subsidies are intended to create greater incentives to registration, by reducing the tax burden. Depending on the model chosen, subsidies may favor both the worker and employer or only the worker.

The application of subsidies may be part of a strategy that incorporates all employees (and independent) workers or may be a measure that includes only difficult-to-cover groups such as domestic workers. For example, in Costa Rica the state subsidizes a percentage of the social insurance contributions made by domestic workers and their employers (CCSS Costa Rican Department of Social Security), providing a unique scheme for the domestic work sector. In this case, the total contribution rate is 34 percent (less than the 36.5 percent that would correspond to a common wage earner), where the employer contributed 24.17 percent of salary, the worker 9.17 percent and state 0.66 percent.

In Turkey, the contribution scheme design includes a state subsidy for health insurance and pension of the Social Security Institution (SGK, Sosyal Güvenlik Kurumu), whose beneficiaries are the employers and workers in all occupational categories, including domestic work.

Tax incentives. An effective way to stimulate the formalization of domestic work is the creation of tax incentives.

In practice different ways to design tax incentives are observed; among the most common are the following:

• Application of payment of contributions to social security as expenses deductible from income taxes. In some cases, such as Germany and France, limits are set on the amount of deductible expenses.
• Reduce the percentage of taxes for employers, when the worker has a full-time contract.
• Reductions on a percentage of contributions for employers that do not have arrears of contributions, for an extended period. In Ecuador, if employers contribute for five years without arrears, the Ecuadorian Social Security Institute (IESS) does not charge administrative costs for 3 months, corresponding to 0.44 percent of wages reported.
• Reductions in contributions for employers who use a service voucher, as in Belgium (ILO, 2013c).

Tax deductions or exemptions. Domestic work is an economic activity that is associated with low wages and in most cases wages are below the national minimum wage, so that the payment of contributions can be a difficult requirement to meet in practice. Consequently, some social security schemes exhimen of the payment of contributions to domestic workers under certain circumstances.

In some cases, the contributions scheme design makes that employers are obliged to take the total contributions to social security, as in the case of Argentina, and domestic workers can make voluntary contributions.

Meanwhile, some social security scheme stable that employers must assume the payment of all contributions when employees have a salary below a defined threshold. In the Philippines, for example, when domestic workers earn less than P 5,000 (about $ 110), employers must provide full payment of contributions to the Social Security System (SSS); one of the three regimes in which provide workers.

A similar measure is applied in Costa Rica by the Costa Rican Social Security Fund (CCSS) by a contribution scheme based on the contributory minimum wage, which in 2013 was 131,760 colones (about $ 239). In this scheme, if the reported salary is less than the contributory minimum wage, the employer is responsible for paying the difference in contributions resulting from applying the reported salary and contributory minimum wage.

 

3. Affiliation and promotion of coverage

Administrative procedures which are dependent on the worker. The mechanisms of affiliation applied for domestic work are generally the same as those used for the rest of employees. But the reality is that domestic work is an activity with very specific characteristics compared to wage labor relations. For this reason, some social security schemes have created alternative mechanisms to facilitate the processes of affiliation and administration, where workers are responsible for functions that typically correspond to the employer.

Spain has a successful experience in this regard; in this country workers that are providing services for less than 60 hours a month for an employer, can directly manage changes in the registration data and salary, subject to prior agreement with the employer. The changes may include, for example, the reference wage, unsubscribe in the registry, change the number of hours worked, among others. In any case, all requests must be signed by employers. This measure helps the record of changes in the conditions of employment occurs more quickly at the level of the social security institution, and allows the worker to be a permanent auditor of changes.

Multi employer scheme and part-time scheme. The work part-time or hourly is usual in domestic work sector, which very often leads to work for more than one employer. These characteristics represent a challenge to the extension of social security in this sector, which call for the need to innovate.

To overcome these difficulties, some countries like France, Italy, Colombia have implemented schemes to facilitate the registration of workers who work for more than one employer or part time. The first scheme is intended to enable workers to record the contributions simultaneously to more than one employer, while coverage scheme seeks part-time workers to have the opportunity to be included in the social security even if they work only a few hours a week or a few days during the month.

In practice, both schemes require the implementation of administrative adjustments, including new IT processes. For example, incorporation may be by design changes a scheme contributions, specifically in the definition of contributions, or by adjustments in the mechanisms of registration and collection of contributions, but there is no single method of deployment. Some of the measures taken to implement the scheme multipatrono or part-time are: the use of service voucher in France and Belgium; differentiated contributions in Italy; fund as payment periods in Mauritius; or applying identification systems employers, as in Colombia and Ecuador.

In France and Belgium, institutions use a service voucher system, which is a means of payment and create tax incentives, facilitates the administrative conditions for access. In Italy, the INPS (Istituto Nazionale della Previdenza Social) established a system of differentiated contribution to housework for those with part-time; Employers and workers contribute based on hourly intervals, although it must meet the requirement of a minimum of work hours per week.

An interesting experience for implementing insurance scheme for domestic work part-time was implemented in Mauritius, where the Ministry of Social Security set several contributory minimum wages, which vary depending on the time of payment of wages: daily, weekly, biweekly or monthly. So the employer and the employee contribute according to the contract period established within the month. Moreover, in some countries like Colombia and Ecuador social security institutions have incorporated a system for identifying employers including multipatrono scheme. This identification system give a contributor identification number to each employer, through which workers may declare more than one employer in their records of contributions made to social security.

Education and awareness of domestic workers and their employers. The formation of a culture on social security is essential to create a public awareness of the human right to social security aspect. When citizens are better informed about the benefits associated with the coverage of social security, they are more interested in defending their labor rights and have greater availability to join the social insurance. Here are presented some steps to strengthen education in social security and create greater public awareness:

1. Incorporate civic education on social security training programs in the education system, at all ages;
2. Provide information to the public through the media, taking advantage of the various existing channels: radio, television, newspapers, websites and specific social marketing campaigns in order to spread the benefits of registration to security social;
3. Publish special bulletins on domestic work, which provide basic information on schemes and benefits offered by the programs;
4. To develop links with organizations of domestic workers, employers, unions and other civil society groups, in order to facilitate the dissemination of information; and
5. Launch campaigns for decent work for domestic workers, developed in coordination with social security institutions, ministry of labour, civil society, among others.

Use of information technologies. Social security institutions have been deepening the use of Information Technology and Communication (ICT) to improve management, which result in providing new and better administrative services of the social security. Some of the most common are using mobile applications, which allow employers to access a mobile application (smartphone) to manage the registration, payment of contributions, changes of wages reported, updating of information, including other processes.

Integrated call centers between social security institutions and the ministry of labour to resolve queries distance of domestic workers and employers, they also represent a successful practice in this area.

Inspection service. Despite its complexity, the application of the inspection services in domestic work is needed to ensure compliance with the legislation on social security element. In practice, the inspection services are a direct institutional support compliance with labor regulations, who use a number of mechanisms for preventing, reporting and sanctions (ILO, 2009).

Course for employers. In some countries like Singapore, institutions have implemented courses for employers of domestic workers, whose registration and approval is required in some cases before registering a domestic worker in the ministry of labor or social security institutions. The course can be virtual or presencial, where it provides information about the rights of the employer and the worker, the definition of wages, reporting procedures, among others.

Access to loans. In designing strategies to expand coverage, it is important that social security institutions to assess the creation of programs of personal loans and mortgage loans for workers who are affiliated in the contributory programs, in order to create incentives and build trust among the insured workers. Some countries that have incorporated this measure are Ecuador, Malaysia, the Philippines and Costa Rica. In any case it is important to be cautious in its application, since these mechanisms should not undermine the profitability of social security funds.

 

4. Collection and recovery of contribution

In social security systems, the functions of collection and recovery are critical issues that must be managed properly in order to extend the contributory coverage and improve the sustainability of programs. Some of the mechanisms that have been implemented in this line are:

Single and centralized collection system. There is general consensus on the need for a single and centralized collection system compared to a decentralized and fragmented system. Usually, a centralized collection system is integrated with the affiliation system, facilitating the process of registration and collection of contributions.

The centralization of the collection process in a single institution has been a practice used successfully primarily in developed countries, such as Ireland, Sweden and the UK, and in some developing countries, such as Costa Rica and Uruguay (ISSA, 2011) . The system can operate in the same institution that grants social security benefits or an independent institution such as the Ministry of Finance, which in his case is then responsible for transferring the funds to the institutions responsible for administering benefits.

Using a centralized model can favor both institutions as the insured workers. It facilitates the process of detection of irregularities as the evasion and multiple registrations. Moreover, it can create economies of scale by centralizing management of both activities (registration and collection) and avoid cost duplication, something very common in a fragmented model. Control mechanisms associated with a centralized model are very favorable; allow to apply crossed controls, mainly with the ministries of finance. Other advantages are associated with the facility to create tax incentives, reducing the risk of corruption and ease of process control and monitoring in management.

Facilities for the payment of contributions. The centralized collection system is a model that facilitates the governance of social security resources, but at the level of operational management institutions need to incorporate different strategies to facilitate the payment of contributions to employers and workers. In some countries where it has a high coverage for domestic workers, some common strategies are identified, which generally include a major technological component. The most important strategies to facilitate the payment of contributions are:

• The use of an institutional web platform or a mobile application, to facilitate registration and payment of contributions (Uruguay: BPS Trabajo Doméstico);
• Agreements with commercial banks for payment of contributions, in person or through institutional web platforms;
• Automatic debit services;
• The use of call center services to manage payments by direct debit on bank accounts (Italy);
• Agreements with post offices and commercial entities such as supermarkets or pharmacies, to pay contributions in these places;
• The use of service vouchers.

Typification of offenses and sanctions. It is essential that social security systems have a robust legal framework that clearly defines the typified fouls and sanctions applicable to infringements of employers who incur evasion.

In relation with the employer registration, countries usually set a deadline, in days, for the employer to comply with its duty to make affiliation to social security; deadlines vary significantly depending on the country. For example, in Cape Verde the National Social Security Institute (INPS) specifies that employers must enroll and domestic workers within 15 days of starting employment; while in the Philippines, this period is extended to one month.

As for sanctions, in practice great differences from one country to another are observed in terms of the severity of sanctions. Each country focuses on those measures which is considered that the level of compulsion should be higher. Regardless of the intensity of sanctions, the legislation for domestic work, generally two rates apply:

1. Economic sanctions such as:

1. A fine expressed in reference to mínimum wages;
2. Applying an interest rate of default on the value of the accrued contributions. In the Philippines, the law includes sanctions as part of a surcharge of 3 percent of the balance due;
3. The application of a fine equal to a fraction or all of the contributions due. In the case that is a fraction, progressive increases in the percentage is applied, as the number of months increases. In Argentina, for example, the penalties include a fine of between two and ten times the amount evaded.

2. Sanctions with jail.

In most cases, social security schemes do not establish specific offenses and sanctions for employers of domestic workers, but generally they are applied the same  legislation used for the rest of workers.

It notes that although some laws emphasize typification and sanctions of different practices, others put greater emphasis on combating tax evasion; however, take into account that both are important, and treatment of each must be considered separately in the legal framework.

Finally, it is important to note that the compulsory capacity of the collection system, raised in terms of legal content, does not ensure the success of a coverage policy, but it is an essential basis for improving the institutional machinery for a the extension of coverage. In that sense, the legal system and enforcement capacity play a decisive role in the operational capacity of the institutions of social security.

Service voucher. Strategies to increase the number of domestic workers affiliated to social security institution has involved the implementation of incentives for employers, including economic incentives. A successful experience in this regard is the "service voucher"; It is a system whereby employers can acquire a vouchers or coupons in the tax offices (compulsory or voluntary), which are used by employers as a means to pay for labour for hours or days of work; workers who receive the vouchers can exchange them for cash. The appropriate authority used the vouchers for the accreditation of contributions to each employer and worker. This system also offer tax advantages, represents a highly effective administrative measures to facilitate the transition of domestic workers in the informal economy into the formal economy.

Due to its characteristics, the service voucher facilitates the definition of wages of workers and the calculation of wage deductions, including social security contributions. In practice, tax incentives are generally applied in the form of deductions or exemptions from some taxes. The system aims to incorporate tax incentives and as a legal and practical solution for the social security record of employees working part-time or have several employers.

International experience shows that the service ticket reduces transaction costs assumed by employers in paying contributions, and facilitates compliance with regulations on social security for the workers who work for more than one employer, and those who work on a casual basis.

Some of the countries that have established the mechanism of "service vouchers" for domestic workers are Austria, Belgium, Canada (Quebec, Cheque Emploi-Service), the Canton of Geneva in Switzerland (Cheque Service), France, Italy and the Netherlands.

Use of mechanisms presumption. Domestic workers are a population that are difficult to incorporate into social security, which is why some countries have implemented different strategies to improve their identification and registration. To do this, it is necessary to do some adjustments in the administration and in some cases legal reforms are needed.

An innovative measure to include domestic workers in social security is the introduction of a mechanisms presumption based on the household income. Thus the social security institution presumes that a home is an employer of a domestic worker when the household declared for tax purposes income is above a set threshold. In this case, the administration notifies the home indicating that it is presumed that the home employs a domestic worker, so it will be charged the payment of social security contributions. If the household is not the employer, the head of the household must prove to the administering institution its non employer through certain test criteria. Although this measure is generally applied at the level of companies, their adaptation to domestic work has proven to be a highly effective measure. In terms of implementation, it is important that the institutions have a strong legal support for notifications and presumptive charges; It is also essential that there is a strong link between social security institutions and the ministry of finances (or tax authority), in order to release information on the declared income of individuals and households.

In Argentina, the Federal Administration of Public Revenue (AFIP) incorporated the mechanisms presumption in 2013 (Law 26,844). In this country, the AFIP is charge of the registration and collection of taxes and contributions, and if AFIP presumed to households earn an annual equal to or greater than 500,000 pesos (US $ 55,000) and have a financial asset of more than 305,000 pesos (US $ 34,000), they are employers of domestic workers (General Resolution 3492/2013). The scheme allows tax inspectors to visit directly the homes where it is presumed that there are undeclared domestic workers.

 

References

CPF. 2014. Guide to CPF Contribution rates. From 1 January 2014. Central Provident Fund. Singapore.

OIT. 2013. Manual de buenas prácticas para trabajadoras y empleadoras de servicio doméstico. Organización Internacional del Trabajo 2013. Santiago

ILO. 2013c. Formalizing domestic work through the use of service vouchers-The particular cases of France, Belgium and the canton of Geneva. ACTRAV

ILO. 2009. The gender dimension of domestic work in Western Europe. International Migration Papers No. 96. International Migration Programme

ISSA. 2011. Success factors in contribution collection and compliance. Social Policy Highlight. Internacional factors in contribution collection and compliance.

ILO. 2012. Decent Work for Domestic Workers. The state of labour rights, social protection and trade union initiatives in Europe. An ACTRAV/ITC-ILO report realized in cooperation with ETUC and EFFA