Ms Patricia King:

Resources are deficient everywhere in this regard. They are deficient at the WRC as there are some 57 labour inspectors for the entire economy. Within the scope section, there are these 117 people utilised to do this work between the joint investigation units and the scope section of the Department itself.

Some 146,000 people are employed in construction with 32,000 of them declared as self-employed. How can 54 labour inspectors in the investigation unit and the small number of people who are directly employed in the scope section to counter that? Why would people not come to the view that this can continue to happen and nobody will deal with it? We talked about the paper system and the online system. At the moment a contractor fills in all the details online, classifies workers as self-employed and nobody questions it.

One of the reasons is very clearly highlighted in the Comptroller and Auditor General's report. The Revenue Commissioners do not view themselves as having a role in questioning any of that; they are mere collectors of the money into a fund and they pass it on to the Department of Employment Affairs and Social Protection. However, they have no role in questioning. Apparently every now and then there are telephone calls between Revenue and the Department of Employment Affairs and Social Protection if trends are apparent. That is how the system operates.

We felt that under the paper system, people were going through the papers and something might be picked up, but actually it is not any stronger of that. Overall Revenue has no function. I met the chairman of the Revenue Commissioners who is a very nice man who talked to us and so on. He was very clear that the Revenue Commissioners' function is to collect it. They do it because it makes it easier for the State to collect the money in that way, but they do not believe it is their job to question any of that. That is in the case of PRSI. They have a different view on income tax because they have a different role altogether in that area. We believe there is dysfunction in that regard. Does it not suit those who utilise it to have that dysfunction? They are all operating based on that dysfunction because they believe they will be able to get away with it and nobody will stop them.

The other big prize is contained in the appendix we provided to the committee. Apart from the big economic incentive of not having to pay the employer PRSI at 10.9%, the employers divest themselves of all employment law responsibilities. Therefore, they do not need to deal with that gang called the trade union which is looking after these people. Apart from their social welfare contributions, which will affect their pensions and damage their chances of income at a later stage in their lives, it is harder to deal with an issue about holiday pay or their employment on a site. Why would the contractors not want that? Is that not the panacea they look for? From that point of view, this is highly imbalanced and leads to all sorts of difficulties that my colleagues will outline to the committee if it is building sites or any of the other areas where this mechanism is utilised. The resources are not there and the State will need to make a decision about that.

I take the points made about the proposal relating to the end user that could be introduced. If I understand it correctly, I think it is a bit of a cop-out because it would allow the contractor to put the cost back on the person getting the job done. We should be able to classify people properly. Workers deserve to be classified correctly. We should be able to do that and have a system that supports that rather than this stuff.

The other option that is coming, which is somewhat welcome, is the issue of drawing in the contractors to pay more money. However, at the moment the proposals coming from the Government - indeed, decisions have been made in respect of the self-employed - have severe implications for the Social Insurance Fund in itself because the self-employed pay 4%. That fund is under severe pressure with 70% being paid out in State pensions to people who have reached retirement. The most recent actuarial review of the fund suggests it could be in severe financial difficulty by 2035. Why would it not be in difficulty if one group is offered all the benefits for 4% while the rest of us can only be in it if we have an employer to match our 4% with a further 10.9%? There are big issues all around.

In 2017, the Department of Finance tax strategy group made a recommendation that the self-employed contributions should be proportionate with the benefits they would get. It estimated that proportion to be a 12% contribution. Clearly, there was a decision made to have a proportionate contribution into the Social Insurance Fund from self-employed people. I am slowly doing away with my chances of going home peacefully. If there is a chance to get self-employed people to pay 12%, which is regarded as proportionate, then the economic incentive for employers would lower greatly because everybody would have to pay this 12%. Therefore, these people bogusly classified as self-employed instead of paying 4% would actually pay 12%. That would be significantly different. I agree with the Minister if that is what she is proposing. In other words, if she is talking about setting the rate economically, then economically it would be a disincentive rather than an incentive. I believe that deals with the perverse incentive. The policymakers need to do considerable work to put that right.

I have dealt with the financial piece, the public procurement, the perverse incentive and the resources. There is some hope for the EU directive although the phrase about time running out seems to be used for everything now. If the transparency and predictable work directive were to come through, it is possible that we would have a better definition of the word "worker", which might be helpful for the classification and bring a decline in the misclassification. I gather from our research that the Government has not been advocating in line with what has been proposed at the various European Commission meetings and so on. The Government is not necessarily in favour of the definition proposed. We are getting strong indicators from other countries that they want to water it down and not have it as robust as it started out. Hope is fading in that regard.

People have asked what the experiences are. My colleagues will answer on that. The fear is quite strong. Workers on a building site or any other place of employment where this is widespread practice may know they have been misclassified fairly early in the process. They may ask the employer why they are classified in that way because they feel they are a worker, filling all the control mechanisms and everything else. The answer is likely to be that if they do not like it, they can go somewhere else and take a job. That is the reality of the choice a worker has. In most cases that is no choice.

I will leave it at that. I have tried to cover the main issues members have raised.