Patrick O'Donovan (Limerick, Fine Gael)
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I thank the Ceann Comhairle's office for selecting this matter. In the short time I have been in this House, one of the difficulties I have come across - I am sure other Deputies have faced the same situation - concerns the problems of self-employed people who attend constituency clinics. Their businesses have evaporated and collapsed in a heap thanks in no small way to the mismanagement of the economy for a number of years by the previous administration, leading to the collapse of the construction industry. The vast majority of people who are being left in a limbo situation are those who were self-employed and either directly involved in the construction industry or those connected to the retail sector who have seen their businesses collapse in the economic meltdown that this Government is now trying to get the country out of.

On a number of occasions I have raised this matter by way of parliamentary questions to the Minister for Social Protection. In its pre-budget submission, the Small Firms Association has also identified this as a major issue. When people who have made substantial contributions by way of taxes and PRSI - both for themselves and, more importantly, for their employees - present themselves at a social welfare office when times get tough, there is absolutely nothing available for them.

I know the Minister of State's answer will be that a review has been established and that there is a class S scheme for the self-employed and class A1 for employees.

However, at present there is no way to allow people to make an additional contribution on a voluntary basis, on top of what they already are making, or to encourage them to so do in order that when times get tough, they would have something they could avail of, if that is what they desire. Moreover, there are many other anomalies in the system. For instance, I refer to the difficulty people who were self-employed encounter if they manage to get into a community employment scheme in respect of being reassessed or the difficulties they have in gaining access to retraining or any form of support from the State in the context of such support being assessed under spouse's income or being assessed on a holistic basis. This issue pertains to a group of people who are silent regarding the effect this is having on them. However, I firmly believe that were one able to drill down into the figures on the approximately 80,000 people who emigrate from this country annually thanks to the economic collapse, they primarily would be tradespeople such as carpenters, painters, plumbers or plasterers. The vast majority of this group were self-employed and have credit they cannot service. Moreover, the vast majority of them had people working for them, kept their taxes, paid their PRSI and were instrumental in making the economy work.

If this country is ever to return to having real growth in local communities, those who are the wealth generators must be looked after. The Society of St. Vincent de Paul has identified the self-employed as being the new poor. This issue has been kicked around for several months in respect of a commission to establish and examine what will be done for them. There is a real sense of urgency in this regard because there will be a major problem unless something is done soon. I wish to make an appeal to the Minister, through the Minister of State, because unless the issue of how to treat self-employed people is dealt with, we will be storing up a major social problem for ourselves. Those concerned are not people who make up stories but are genuine people who cannot make ends meet at present. I appeal to the Minister of State, through his colleague in Cabinet, the Minister for Social Protection, to put this issue at the top of the agenda.

Alan Kelly (Tipperary North, Labour)
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I am taking the debate on behalf of the Minister for Social Protection. 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 their employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI class A.

In 2011 the Minister for Social Protection established the advisory group on tax and social welfare to meet the commitment made in the programme for Government. The advisory group is charged with, among other issues, examining and reporting on issues involved in providing social insurance cover for self-employed persons to establish whether such cover is technically feasible and financially sustainable. The advisory group's overall method of working 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 upon 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. 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.

The third actuarial review of the Social Insurance Fund, as at 31 December 2010, was completed in 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. One issue examined in the 2010 review was the long-term cost implications to the Social Insurance Fund 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 if jobseeker's benefit in addition to core State pension, contributory, is provided. The average contribution rate required for the core State pension, contributory, plus jobseeker's benefit and the invalidity pension is estimated to be in the region of 17.3%. Any proposals to revise the social insurance system for self-employed persons by extending social insurance entitlements 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.

Self-employed workers may access social welfare payments supports by establishing entitlement to assistance-based payments such as jobseeker's allowance and disability allowance. In the case of jobseeker's allowance, they 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 jobseeker's allowance or disability allowance, the means of a person's husband or wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

Patrick O'Donovan (Limerick, Fine Gael)
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One point that I, those who have made representations to me and others wish to ascertain is when the aforementioned report will be finalised and when action will be taken on it. As I stated, jobs are being haemorrhaged, primarily in the private sector and among self-employed people. The Small Firms Association also has identified a potential pitfall in this regard that it will be important to avoid from the perspective of the self-employed. It is that while the Minister of State has outlined the contribution that would be required in percentage terms, it cannot be regarded as some form of additional revenue-generating exercise into the future. It must be on a voluntary basis because, as I noted at the outset, there is no redundancy provision or safety net for self-employed people. These are the risk-takers in the State who create the wealth and the employment from which the rest of society can benefit. The State's public finances will not be dealt with in any meaningful fashion unless entrepreneurs and risk-takers return to generating jobs. Moreover, this will take place at the level of small or medium-sized entities. Given the manner in which such people have been treated heretofore and given that so many excellent people have been lost through the collapse in the economy on foot of the previous Government's maladministration, particularly in respect of construction, I believe now to be an opportune time to provide some element of hope to those who are about to take this risk again. They should do so in the knowledge that were they to relaunch a business and to take on people, there also would be something in place for them and their families. The sooner this is dealt with the better, because it is creating a huge amount of unnecessary uncertainty and ultimately it is holding back economic growth at a local level.

Alan Kelly (Tipperary North, Labour)
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I have raised the issue with the Minister for Social Production and as the Deputy is aware, a working group is engaged on the issue. The work in this regard is quite extensive and is being carried out in a structured fashion. Given the financial aid programme in which the State finds itself, consideration obviously must be given for that and therefore a defined structure must be gone through. I accept absolutely the Deputy's points in respect of the self-employed. All Members deal with these issues in their constituency clinics and there is an issue that must be dealt with, although it must be done in a proper way. The issue raised by the Deputy regarding voluntary entry into a system must be prioritised in these considerations and I will relay this point back to the Minister.