Thomas Pringle (Donegal South West, Independent)
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Question 3: To ask the Minister for Social Protection her views on amending the pay related social insurance for self employed persons to allow them through extra contributions to be able to claim jobseeker's benefit in the event that their business closes or they are out of work, the new system would require an additional contribution and a qualification period; and if she will make a statement on the matter. [29367/11]

Joan Burton (Dublin West, Labour)
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I am very aware of the very difficult financial position of some self-employed people. However, there must be a balance between contributions made and benefits received. Self-employed persons are liable for PRSI at the class S rate of 4%, which entitles them to access long-term benefits such as State contributory pension and widow's, widower's or surviving civil partner's contributory pension. Ordinary employees, who have access to the full range of social insurance benefits including jobseeker's benefit, pay class A PRSI at the rate of 4%. In addition, their employers 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. For employees earning less than €356 per week, the rate of employer's PRSI is 4.25%.

In this context, it may be noted that self-employed workers generally achieve better value for money from social insurance compared to employees. The 2005 actuarial review of the social insurance fund found that a self-employed contributor can expect to receive over ten times what he contributes, compared to an employee, who on average receives only three times what he and his employer contribute, despite the fact that the range of benefits available to employees is greater.

The contributory State pension increased at a greater rate than inflation or earnings growth in the period up to 2010, while annuities offer CPI-linked increases. The market cost of an inflation-linked annuity with €12,000 a year in initial benefits is greater than €300,000, without any associated survivors' benefits.

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Any changes to the PRSI system in order to provide access to short-term benefits such as jobseeker's benefit would have significant financial implications and would have to be considered in the context of a much more significant rise in the rate of contribution payable.

I established the advisory group on tax and social welfare earlier this year to meet the commitment made in the programme for Government. The group will, inter alia, examine and report on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable. I look forward to receiving its report.

The Deputy should be aware that self-employed persons may establish eligibility to assistance-based payments, including jobseeker's allowance. In general, in assessing means, account will be taken of the level of earnings in the last 12 months in determining expected income for the following year. In the current climate, account is taken of the downward trend in the economy.

Thomas Pringle (Donegal South West, Independent)
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I thank the Minister for her response. While it may be true that class S contributors receive more than ordinary employees, that is after they reach the age of 66 and retire. There are a large number of self-employed people who, through no fault of their own in this recession, have ended up without work and dependent on social welfare and have been unable to avail of jobseeker's benefit. I ask the Minister to give serious consideration to increasing the class S contribution rate to ensure there is a safety net. This would be a labour activation measure as well as a way of encouraging people to set up their own businesses. They can do so in the knowledge that there is a type of safety net they can avail of after an appropriate qualification period.

Joan Burton (Dublin West, Labour)
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The Deputy's proposal that self-employed people be allowed to make full contributions at class A level is worth examining. The advisory group on social welfare and taxation, which is currently examining the issue of family supports and child payments in the social welfare system, will next consider the issue of social welfare for the self-employed. We are all aware that during the boom, the last thing on the minds of many people, particularly young men in the construction industry, was making large social insurance contributions, because it felt as though the boom would never end. I am aware of what the Deputy is saying; many of those people have ended up in difficult circumstances. If we want to have a proper welfare system, we must start designing the system so that the self-employed are included as well.

Michael Kitt (Galway East, Fianna Fail)
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I ask all Deputies to keep their questions brief. Deputy Pringle is not the worst offender, but we have to make some progress.

Thomas Pringle (Donegal South West, Independent)
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I welcome the fact that the Minister has asked for this to be examined and I look forward to seeing the outcome. However, I ask the Minister to ensure, if she is agreeable to some sort of system being established, that it will not be voluntary. There is a voluntary scheme under class P for share fishermen, but over the last ten years only 15 fishermen per year on average have availed of it. Thus, it will have to be a compulsory scheme. Overall, it would be for the greater good.

Joan Burton (Dublin West, Labour)
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If we want to build a modern welfare state for the 21st century, there are things we must take into account. People who are leaving school today or leaving college this year or next year will spend some of their time as employees and some of their time as contractors or self-employed. In some cases they will set up companies and become directors. Our welfare system needs to make provision in the future for all those people.

Obviously, people need to contribute so that the system is self-funding. This year, there is a deficit in the social insurance fund of the order of €1.9 million, that is, the contributions have been less than what is being paid out because of the high level of unemployment.