By Jaylan Boyle, Contributing Reporter

Street vendor, photo by Nate Grigg.
Street vendor, photo by Nate Grigg.

RIO DE JANEIRO – Not unlike neighboring Latin American countries, the average Brazilian’s daily needs are met in part by an army of the less fortunate. Street peddlers, micro-entrepreneurs and various other folk contribute to the sumptuous flavor of the region, and yet are invisible to the state.

Why this should be the case specifically in Latin America is not easy to put a finger on. It may seem obvious that poverty engenders a ‘primitive’ economy, but the situation is compounded by convoluted government regulation and workers who don’t pay tax.

Recent measures have been rolled out that seek to address the situation. The government has launched the website, evidence that steps are being taken to make good on election promises. The site, which translates to The Businessman’s Portal, is part of the largest labor formalization initiative Brazil has seen. Its principal aim is to make it possible for entrepreneurs to legalize their business entity with a 30-minute visit to the website.

Following registration, the applicant becomes a member of one of three distinct categories. They are deemed an Individual Entrepreneur if they bill (or are paid) no more than R$36,000 per year, a Micro-Enterprise if their gross revenue is less than R$240,000, and a Small Company if revenue exceeds R$240,000.

Registered entities then take their place on the National Register of Legal Entities (CNPJ). According to the new website, the advantages include:

* The businessperson has access to Simples Nacional, a taxation scheme for small business that merges several taxes into one payment, and lessens the tax burden overall. This single payment will be no more than about R$55 per month for the Individual Entrepreneur, and is adjusted annually according to minimum wage fluctuation.

* Access to banking facilities. This will entitle the legalized entity to apply for credit at market interest rates.

* Assistance coverage for health, death and maternity for the worker/business person and their family.

* Retirement assistance.

According to the 16th Conference of Labor Statisticians, an informal worker is defined as either an ‘own account’ micro-entrepreneur who does not keep a complete set of accounts, or a worker who does not have a contract.

Participants in this hidden economy have no labor rights. President Lula clearly sees the situation as a stone in the shoe of Brazil’s continued development, and has called workforce formalization a top priority.

The informal sector is estimated to constitute 55% of the Brazilian workforce, although the official Monthly Employment Survey (Pesquisa Mensal do Emprego) consistently arrives at a more conservative number, around the 35% mark. Whichever way it is computed, this invisible army is a considerable proportion of Brazil’s working population, and a rapidly growing social segment.

Further evidence that the government is intent on improving it’s relationship with Brazil’s hidden multitude is the Rio Poupa Tempo (Rio Saves Time) project, to launch on July 7. It will put many government agencies that interface with the public in one spot. This includes identification card services, welfare information, and business registration.

There could be as many as 500 relevant services bundled together, with capacity to serve 5,000 per day. The project will initially concentrate on Zona Oeste (West Zone) and Baixada Fluminense, launching in the Bangu Shopping mall.

The Brazilian work force has gone from strength to strength this year despite the financial crisis. The country gained slightly more than 131,000 payroll jobs in May, continuing an upward streak of four consecutive months.

Construction and manufacturing have led the charge in an upturn that is seen as underscoring a brighter outlook for the economy overall, with job creation set to accelerate according to the Labor Ministry. In the words of Labor Minister Carlos Lupi: “We are looking at the crisis from the rear-view mirror.”


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