Sesc and Senac: How the S System works – 05/25/2023 – Market

Created in the 1940s, the nine entities that make up the so-called S System return to the center of the debate on the use of resources, which amounted to almost BRL 30 billion in 2022.

This money corresponds to about a third of the expenditure with the Auxílio Brasil/Bolsa Família last year and would be enough to fund 70% of unemployment insurance or 60% of the federal government’s investment in the period.

Although it represents only 1.2% of the federal tax burden and 0.28% of GDP (Gross Domestic Product), the amount corresponds to about half of the collection of taxes with the IPI of the industrial sector and the IOF on financial transactions.

The S System funds are at the center of an arm wrestling match with Embratur, the agency that takes care of promoting tourism, now commanded by former deputy Marcelo Freixo, one of the main allies of the government in Rio de Janeiro.

The Chamber of Deputies approved a provisional measure (MP) which, among other points, allocates 5% of the resources collected by Sesc and Senac with contributions to Embratur for the promotion of tourism. The inclusion was made by the leader of the Lula government in the Chamber, José Guimarães (PT-CE), rapporteur of the text.

Dissatisfied with the loss of funds, the CNC (Confederação Nacional do Comércio) began an intense mobilization throughout the country, and claims to have obtained more than 1 million signatures against the transfer.

This Wednesday (24), the Senate approved the MP, but after closing an agreement with the government for Lula to veto the stretch and seek, in the future, another source of funds for Embratur.

Understand how it works, how much the S system moves and what are the criticisms of the model:

What is the S System?

Set of entities managed by business federations and confederations, segmented by type of economic sector. They are classified as private and have no administrative link with the government. They offer teaching, training, research and leisure services.

Where does the money come from?

From the compulsory contribution of companies, which is collected from workers’ payroll. Some services and activities are paid by users.

What are the contribution rates on payroll?

They vary depending on the sector: 1% for Senai, Senat and Senac; 1.5% for Sesc, Sesi and Sest; 2.5% for Sescoop; from 0.3% to 0.6% for Sebrae and from 0.2% to 2.5% for Senar.

What is the collected amount?

In 2022, contributions to the S System totaled R$27.3 billion, equivalent to 1.2% of the federal tax burden and 0.28% of GDP.

How is the money shared?

Contributions are collected by the Federal Revenue Service, which is passed on to the entities.

Which entities make up the system?

• Sesi (Industry Social Service)
• Senai (National Service of Industrial Learning)
• Senac (National Trade Learning Service)
• Sesc (Social Service of Commerce)
• Senar (National Rural Learning Service)
• Sescoop (National Cooperative Learning Service)
• Senat (National Transport Learning Service)
• Sest (Social Transport Service)
• Sebrae (Brazilian Micro and Small Business Support Service)

Where does the money go?

Social services (Sesi/Sesc/Sest) develop activities linked to the well-being and quality of life of workers, with centers dedicated to sports, culture, health, food and tourism, for example.

Learning and support services (Senai/Senac/Senat) offer qualification courses (basic to graduate) for workers in these sectors, develop innovation and technology solutions for companies and have startup acceleration programs, among other activities.

Senar and Sescoop act in both functions (social and learning).

Sebrae is the only entity that is not linked to a confederation and its objective is to help micro and small companies and individual micro-entrepreneurs, through courses, consultancy, for example.

How did the S System come about?

Sesi, Senai, Senac and Sesc emerged in the 1940s. From 1990 onwards, the system gained five more autonomous services.

Senai was created by Getúlio Vargas in 1942 and is managed by the CNI (National Confederation of Industry). It emerged with the mission of organizing and administering learning schools for workers in the sector.

In 1946, Senac was created, linked to the trade, services and tourism sector. In the same year, Sesi and Sesc came to implement measures that would contribute to the social well-being of workers in both sectors.

Sebrae emerged in the 1970s, but only entered the S system as an autonomous government entity in 1990. The other entities emerged in the period 1991-2001.

What were the attempts to change the system?

Several governments, including Dilma Rousseff (2011-2016) and Jair Bolsonaro (2019-2022), have already tried to change the allocation of resources from the S System, but failed in the face of pressure from business leaders, who barred these proposals in Congress.

Former Economy Minister Paulo Guedes, for example, took office defending cuts in resources for interest groups, promising to “stab” the S System, but failed to make his initiatives prosper in Congress.

In 2019, Bolsonaro framed the organizations in the rules of the LAI (Access to Information Law) and forced the entities to detail expenses with salaries and services.

When he commanded the Ministry of Education, in 2008, the current Minister of Finance, Fernando Haddad, managed to make changes to the system to increase the gratuity and the number of vacancies in technical courses of initial and continued formation of four entities.

There have also been attempts to limit the remuneration of entities to the federal employee ceiling (R$ 41,650.92). At Sesi-SP, for example, the disclosed values ​​reach R$ 62,143.

What are the criticisms?

Former senator Ataídes Oliveira (PSDB-TO) wrote the book “A Caixa Preta do Sistema S” in the last decade, criticizing the model, such as the existence of high-value courses, surplus resources invested in the financial market, deviations committed by managers and high remuneration of directors, among other issues. A reform proposal drawn up by the parliamentarian was also barred in Congress.

In 2019, the Attorney General’s Office demanded transparency in the use of money transferred to entities.

Union leaders have presented to the government the claim to increase the representation of workers in the S System, so that they participate in the definition of the entities’ strategies, especially in the area of ​​professional training.