SELF-EMPLOYED COVERAGE Transforming the custom of informality. The St Kitts-Nevis Experience HISTORY • Soc. Sec. Established February 01, 1978 • Provided 6 pecuniary benefits • Now provides 25 benefits • Initially Excluded Self-employed persons • Principles pursuit of social security (Equity, Solidarity, Universality)
1. COVERAGE a) WHO IS COVERED A person in the age range [16, 62) whose employment is NOT under a contract of service. Examples: > Professionals (incl. Athletes, Cricketers) > Artisans & Artistes > Entrepreneurs > Family Members 1. COVERAGE … cont’d(1) b) WHO IS EXCLUDED A person who is below age 16 or a person aged 62 or older. A person in an employer-employee relationship/arrangement.
1. COVERAGE … cont’d(2) c) BENEFITS Short Term - Sickness, Maternity, Funeral Grant Long Term - Age Pension, Invalidity, Survivors Employment Injury - Not offered Self-employed Summary: 1996 - 2015 [5 Year Blocks] 1996 - 2000 2001 - 2005 2006 - 2010 2011 - 2015 Averages Registrations 114 113 212 283 Benefits $42,117 $97,550 $151,228 $202,992 Contributions $366,563 $508,591 $941,303 $1,257,527 % Change [Year-on-Year] Registrations --- -1% 87% 34% Benefits --- 132% 55% 34% Contributions --- 39% 85% 34%
Self-employed Registration by Industry: 1996 - 2015 [5 Year Blocks] TOTALS AVERAGES 1996 - 2000 2001 - 2005 2006 - 2010 2011 - 2015 1996 - 2000 2001 - 2005 2006 - 2010 2011 - 2015 TOTAL Agriculture, Hunting & Forestry 13 29 69 117 3 6 14 23 Fishing 15 10 2 18 3 2 0 4 Mining & Quarrying 2 0 0 1 0 0 0 0 Manufacturing 68 45 81 81 14 9 16 16 Electricity, Gas & Water Supply 11 2 4 6 2 0 1 1 Construction 117 141 219 314 23 28 44 63 Wholesale & Retail Trade 141 128 208 264 28 26 42 53 Hotels & Restaurants 29 43 51 122 6 9 10 24 Transport, Storage & Communications 39 42 137 123 8 8 27 25 Financial Intermediation 2 4 9 5 0 1 2 1 Real Estate, Renting & Business Activities 32 40 96 134 6 8 19 27 Public Administration & Defence 0 0 0 0 0 0 0 0 Education 2 7 12 9 0 1 2 2 Health & Social Work 15 18 15 14 3 4 3 3 Other Community, Social & Personal Services 54 46 143 162 11 9 29 32 Private Household with Employed Persons 2 7 13 47 0 1 3 9 Extra-Territorial Organization & Bodies 0 0 0 0 0 0 0 0 UND 29 3 0 0 6 1 0 0 GRAND TOTAL 571 565 1,059 1,417 114 113 212 283 2. CONTRIBUTION RATES a) CURRENT CONTRIBUTION RATE ¤ 10% of insurable wage (subject to ceiling) ¤ SE selects contribution from 14 wage bands. Bands range from <$100 per week to $1,500 per week ¤ Bands may be adjusted incrementally twice annually (1/2 year) by request and approval ¤ Bands cannot be changed after age 57
2. CONTRIBUTION RATES … cont’d(1) b) APPLICABLE EARNINGS SE selects contribution from 14 wage bands. Bands range from <$100 per week to $1,500 per week Bands may be adjusted incrementally twice annually (1/2 year) by request Bands cannot be changed after age 57 2. CONTRIBUTION RATES … cont’d(2) c) SPECIAL ARRANGEMENTS The Income Category of $100 per week is a special category which requires approval from the Directorate to enter the scheme.
3. ADMIN PROCEDURES a) EMPHASIS ON DIFFICULT GROUPS SSB has created dedicated staff to strategize, monitor and liaise with self-employed persons. This provides good support for persons who require extra attention (carrot / stick). 4. INCENTIVES TO FORMALIZATION a) EMPHASIS ON DIFFICULT GROUPS SSB has created linkages with government agencies and departments which incentivizes good compliance records of self-employed persons. Government agencies request Certificates of Good Standing from prospective businesses before awarding contracts, sales or tax concessions.
5. DIFFICULT TO COVER GROUPS a) WHICH ARE THE DIFFICULT GROUPS Survivor, own-account informal SE activity Home Domestics Home Makers Construction Workers “Volunteers” Bus Drivers, Car Washers etc. 5. DIFFICULT TO COVER GROUPS … cont’d(1) b) WHY ARE THEY DIFFICULT TO COVER Nature of Cash Flow Nature of Business (Sporadic and Seasonality) Perceived Irrelevance Dual Employment Prioritizing of Needs (money need for family sustenance, rent etc.) Perceived Irrelevance (already covered by employer) Inconvenient (tedious to transact business)
5. DIFFICULT TO COVER GROUPS … cont’d(2) c) LEGAL & ADMINISTRATIVE BARRIERS Design of the System (e.g. SE’s who are also Employees are not required to pay contributions on their SE activity.) Weak Legal Definition (of Self-employed) IT Deficiencies Harsh Penalties (Usury: 5% monthly penalty for late and non-payment) Lack of Representation (no representation on Board) Access to worksite (traditional/non-traditional) END
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