Éamon Ó Cuív (Galway West, Fianna Fail)

I thank the Senator for raising this very valid question. I hope the answer will explain somewhat the challenges inherent in the matter raised. The social insurance system draws together a relationship between the employment or self-employment status and the rate of contribution payable and benefits or pensions receivable as a result of these contributions. In common with many social insurance systems throughout the world, the system is not actuarially based but funded through a pay as you go approach. Today's contributors support both past and current contributors while also ensuring their own future security by building up entitlement to later benefits and pensions and paying into a mechanism that redistributes income over one's lifetime.

In 2011, self-employed workers will be liable for PRSI at the class S rate of 4%, the same personal rate as is paid by ordinary employees. Employers also make a PRSI contribution of 10.75% in respect of their employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI class A. As a result, ordinary employees can build entitlement towards the full range of social welfare benefits. Class S contributions will continue to provide cover for long-term benefits such as the contributory State pension and widow's and widower's pension only.

PRSI coverage is related to the risks associated with employment or self-employed, the annualised system of contributions for self-employed people and the practicalities of administering and controlling access to short-term payment for the self-employed. A system of separate arrangements for employed and self-employed workers within a social insurance context is common in other European social protection systems. It may also be noted that the 2005 actuarial review of the social insurance fund indicated that the fund favours the self-employed over the employed when both employer and employee contributions are included in respect of the employed person. The analysis demonstrates that despite the fact that they are eligible for a narrower range of benefits, self-employed persons can gain substantially more from the fund than employees. This relates to cost of pensions and the length of time people draw down such pensions.

There are no plans to extend cover for short-term benefits to this group of insured workers. Any such measure would have significant financial implications and would have to be considered in the context of a much more significant rise in the contribution payable. In terms of current supports available to self-employed persons, it may be noted that in certain cases a self-employed person who had insurable employment in the relevant year, currently 2008, and had paid sufficient class A contributions may qualify for a jobseeker's benefit payment, provided all the conditions of the scheme are satisfied.

A self-employed person who has paid insufficient class A contributions may instead qualify for jobseeker's allowance. Jobseeker's allowance is a means-tested payment and in assessing a person's means for the purposes of this allowance, account is taken of all income which the person may reasonably expect to receive during the succeeding year. In general their means will take account of the level of earnings in the past 12 months in determining their expected income for the following year.

In the current climate account is taken of the downward trend in the economy and it is accepted that future earnings may be lower than those of previous years. The process also recognises the potential for significant upward or downward variations in income from one year to the next. If a self-employed person's position changes after making an initial claim for jobseeker's allowance, the person can apply to have his or her means reviewed in the light of these changed circumstances.

Self-employed people on jobseeker's allowance for 12 months or more will be eligible for the new Tús initiative of community work placement which will pay the full rate of jobseeker's allowance plus an extra €20 per week. This is key as someone who establishes any eligibility for jobseeker's allowance for a year will be able to get this payment, which is in lieu of work done and can be added to adult and child dependant allowances, etc. I often find schemes such as this and the rural social scheme are very attractive to self-employed people.