Ann Phelan (Carlow-Kilkenny, Labour)
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I welcome the opportunity to speak on this important issue today. In these times of severe economic difficulty, people are under tremendous pressure to make ends meet and some are finding it extremely difficult to keep going. If in times like these if a worker is unlucky enough to lose his job, he can avail of social welfare, which will ease the burden somewhat. There is, however, another branch of society that historically found it even more difficult to keep going in hard times, the self-employed. I was on local radio a short time ago and people were ringing in, saying they were unemployed and finding it difficult to access social welfare. They also told me family resource centres are where the self-employed tend to look for entitlements. There is a myth that a self-employed person is not entitled to any social welfare payments. This is simply untrue but the myth is sometimes perpetuated. Since I was elected, I find a great deal of politics is about perception rather than hard fact. We should promote the message among the self-employed that help is available from social welfare.

Another problem is that those who need help think they must de-register as self-employed workers to avail of social welfare, which is yet another myth. I call for forward planning in better times. Would it not be possible to design a scheme for self-employed people to pay into? At present, they pay S class PRSI that does not entitle them to the full range of social welfare benefits. Given that the recession has thrown up such difficulties for the self-employed, we should design a scheme that would be of some help to them in the future. A companies Bill will be introduced shortly in the House. Could such a scheme be considered in that Bill as it would relate to sole traders and the self-employed?

Thomas Pringle (Donegal South West, Independent)
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I thank the Ceann Comhairle for selecting this issue and I welcome Deputy Phelan also raising this important topic.

We are all aware of the hardships being faced by many people currently. When someone is made unemployed, paying the bills and mortgage, while putting food on the table, is a daunting prospect. While some supports are available to help those in need, life is still a struggle. As it stands, however, the self-employed who find themselves in a similar situation are not entitled to that support and are left with nothing. That is not right and should not be allowed to continue. While social welfare may be available through jobseeker's assistance, jumping through the necessary hoops to show they have a need and can satisfy the means test is very difficult for self-employed people.

There is a high level of unemployment and many were self-employed but because of their status, they are not entitled to jobseeker's benefit or disability benefits, which can have untold consequences on the individual and his or her family. I realise a situation exists where on an actuarial basis self-employed contributors receive a lot more than they contribute to the Social Insurance Fund. These people must be protected when they are unemployed, however, like every other person. By doubling self-employment contributions from 4% to 8%, with such qualifying contributions being made for no less than 104 weeks, we could provide for such people to be eligible for jobseeker's benefit and disability benefits without it having a massive impact on the Social Insurance Fund.

The Minister for Social Protection previously suggested voluntary contributions could be an option but I disagree. We have already seen how voluntary contributions worked for fishermen, with only 20 individuals availing of this option in 2009 out of 1,400 fishermen. Many of them subsequently probably regret the decision not to pay the additional contributions. It is for that reason the contributions must be mandatory for the system to work.

John Perry (Sligo-North Leitrim, Fine Gael)
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I thank the Deputies for raising this important issue. Self-employed individuals who have fallen on hard times or who are without work for some time may establish entitlement to assistance-based payments.

Those who have been previously self-employed can apply for the means-tested jobseeker's allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services. In general, their means will take account of the level of earnings in the last 12 months in determining their expected income for the following year and, in the current climate, account is taken of the downward trend in the economy. As in the case of a non-self-employed claimant for assistance-based payments, the means of husband or wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

As for social insurance benefits, 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 pension, contributory, and widow's, widower's or surviving civil partner's pension, contributory. Ordinary employees who have access to the full range of social insurance benefits pay class A PRSI at the rate of 4%. In addition, their employers make a PRSI contribution of 10.75% in respect of such employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI class A. I note that for employees earning less than €356 per week, the rate of employer's PRSI is 4.25%.

The issue of providing access to short-term benefits to the self-employed was examined in the recently published third actuarial review of the Social Insurance Fund, as at 31 December 2010. The report on the review was completed by consultants KPMG in June 2012 and laid before each House of the Oireachtas on 24 August 2012. The review covers a 55-year period from 2011 to 2066 and builds on the findings of the 2000 and 2005 actuarial reviews of the fund. The scope of the 2010 review was to update the results of the 2005 review, taking account of the policy, economic and demographic changes with particular reference to income and expenditure projections, as well as break-even contribution rates. The review also considered the effects of the various policy options, existing Government commitments and planned reforms. One of the issues examined in the review was the long-term cost implications to the Social Insurance Fund, SIF, and the break-even contributions rates required to provide invalidity pensions to the self-employed and to provide jobseeker's benefit for self-employed workers. The report found that the effective annual rate of contribution or the required contribution as a percentage of salary needed to provide the core full-rate State pension, contributory, which is the benefit currently available to self-employed contributors, is approximately 15%. This compares favourably with the 4% rate currently paid by the self-employed. An incremental increase in contribution rates from approximately 15% to 16% would be required were jobseeker's benefit, in addition to core State pension, contributory, to be provided. The average contribution rate required for the core State pension, contributory, plus jobseeker's benefit and the invalidity pension is estimated to be approximately 17.3%.

Last year the Minister for Social Protection established an advisory group on tax and social welfare and one issue currently under consideration by the group is that of providing social insurance cover for self-employed persons to establish whether such cover is technically feasible and financially sustainable.

Ann Phelan (Carlow-Kilkenny, Labour)
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I accept the points made by the Minister of State. A contribution of 17.3% would constitute a significant increase. However, I will await the outcome and advice provided by the aforementioned advisory group on tax and social welfare. I still believe this matter is worth pursuing because this recession has revealed that unless we learn the lessons from the mistakes we made in the past, we are bound to repeat them. I encounter much misery at present and while I acknowledge people may not wish to pay an average of almost 17.5%, the other side of the coin is their current plight is not a nice scenario either. Consequently, this is a matter that should be pursued.

Thomas Pringle (Donegal South West, Independent)
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This issue should not be considered solely on the basis of an actuarial review It is cold comfort to those in their mid-30s, who had started a business and who perhaps provided employment in the past, to think they will benefit greatly when they reach pensionable age having paid their contributions as self-employed people. In 2011, 2,300 people started businesses in Ireland. These people are classified as being self-employed and are those whom it is hoped will employ others in the future. Consequently, such a measure should be considered as a stimulus package. Members should take the perspective that people who are self-employed are probably less likely to become unemployed or to be unemployed for long periods but that they need social protection and social benefits. Consequently, the overall benefits of having a system in which self-employed people can enjoy some protection, in the form of a social welfare benefit during short periods of unemployment, far outweigh any of the potential costs. Serious consideration should be given to this possibility. Moreover, initially there would be substantial benefits to the Social Insurance Fund because the additional contributions would help to partially close the existing deficit. Consequently, I ask that serious consideration be given to this proposal.

John Perry (Sligo-North Leitrim, Fine Gael)
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The advisory group's overall method of work is based on producing modular reports on the priority areas identified in the terms of reference. Where possible, the aim is to provide recommendations that can be acted on in time for the annual budget, Estimates and legislative cycle and to allow the Government to best address its commitments under the EU-IMF programme of financial support. I completely understand the points made by Deputies Pringle and Phelan regarding the issue of getting support for those who are self-employed and are in business. I fully appreciate the point that they find it very difficult if they go out of business. The group has been considering the issue of social insurance coverage for the self-employed and will submit its report once its examination of the various questions has been completed. Any proposals to extend additional cover to the self-employed must be considered in a budgetary context, taking account of the finding of the actuarial review that the self-employed achieve very good value for money compared with the employed when the comparison includes both employer and employee contributions in respect of the employed person. The Minister for Social Protection, Deputy Burton, will study this report and its recommendations very closely and will take on board the views expressed today by the Deputies. Obviously, the publication of that report will be an occasion for further debate in this regard.