Denis Landy (Labour)
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I welcome the Minister to the House. Is the Minister for Social Protection in a position to consider the provision of social welfare support for once self-employed people who now find themselves unemployed? As the Minister is aware a large number of people who were formerly self-employed and who are now unemployed are entitled to only a limited range of social welfare supports.

The importance of providing support for people who are unemployed or unable to find work by virtue of unemployment, illness etc. cannot be overstated. However, this facility is not available to the self-employed. Self-employed people pay PRSI at the S rate of 4%. People who come under this category include farmers, professional people, certain company directors, people who run their own businesses, sub-contractors and a range of self-employed people.

Class S PRSI contributions provide cover for widow's pension, the contributory pension, maternity benefit, adoptive benefit and bereavement grants. However, it does not provide cover for jobseeker's benefit. The Minister will agree that while this cover is welcome, it is limited in scope. In the past decade, self-employed people have made a considerable contribution to the country and the economy. It is safe to say that the small and medium-sized enterprises have been the backbone of the country and will remain so.

If we recover economically there is no doubt the SME sector will lead the way in that recovery. Unfortunately, we have seen a stark contraction of this sector in recent years. Many businesses have closed and many self-employed people have found themselves out of work. They do not appear on the live register. In the third quarter of 2011, some 12,900 self-employed people lost their jobs.

Extending social welfare protection to self-employed people achieves at least two objectives. First, it secures a measure of social justice which I believe the Minster has a deep interest in pursuing. It is not right that self-employed people should not have to use their life savings or the earnings of their partners. This is a matter of fairness. Second, it reduces the risk for those entrepreneurs who wish to start up their own businesses by providing a safety net. This makes perfect sense at a strategic level as well. We are committed to building an indigenous sector based on small- and medium-sized enterprises. However, we must put in place structural reforms to do so. Many reforms are needed and I release the Minister is playing her part in this area. Providing social welfare support for self-employed people should be a part of this process. I have spoken to many people in the sector who have confirmed that they would be more than happy to pay full PRSI. I call on the Minister to give consideration to this proposal.

Joan Burton (Dublin West, Labour)
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As Senator Landy stated self-employed persons are liable for PRSI at the class S rate of 4%. This entitles them to access long-term benefits such as the 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 a combined rate of 14.75% 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%. It may be noted that self-employed workers generally achieve better value for money by paying social insurance compared to employees.

The 2005 actuarial review of the social insurance fund found that a self-employed contributor can expect to receive more than ten times what he or she contributes to the social insurance fund compared to the employee who, on average, receives only three times what he and his employer contributes. This is despite the fact that the range of benefits available to employees is greater. In this context Senator Landy should note that the market cost of an inflation linked annuity with €12,000 per year in initial benefits is in excess of €300,000 without any associated survivor's benefits. The figure of €12,000 is the approximate value of the State pension to which self-employed people gain access by virtue of the PRSI currently paid. Any changes to the PRSI system to extend the full range of social insurance benefits, including jobseeker's benefit, to self-employed people would have significant financial implications and would have to be considered in the context of a much more significant rise in the rate of contributions payable.

I established the advisory group on tax and social welfare last year to meet the commitment made in the programme for Government. The advisory group will examine and report on issues involved in providing social insurance cover for self-employed persons to establish whether such cover is technically feasible and financially sustainable. In addition, the actuarial review of the social insurance fund, which is due to be completed in 2012, will examine this matter. This will be most helpful in the discussion.

Self-employed workers may establish eligibility to assistance-based payments such as jobseeker's allowance. They can apply for the means-tested jobseeker's allowance if their business ceases or if they are on a low income as a result of a downturn in demand for their services. In general, their means will take into account the level of earnings in the previous 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 unemployed claimant of jobseeker's allowance, the means of a husband, wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

I thank Senator Landy for raising this important issue. I know how concerned he is about it. I await the views of the advisory group on social welfare on this matter.

Denis Landy (Labour)
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I thank the Minister for what I consider to be a positive response. I accept that self-employed people are allowed to apply for means-tested jobseeker's allowance. However, as the Minister is aware this is a cumbersome process that can take up to six or eight months and in the meantime people have nothing to live on. In the context of trying to kick-start the economy the Minister will be aware that for every job we can create, we take one person off the live register and save approximately €20,000 per person per year. Through county enterprise boards and the Leader programme etc. I have been involved in helping people to start up businesses. The main issue is the concern that if the business is not successful, then they have no fall back position and this is a deterrent for people to start a business. I call on the Minister to keep this issue live. I look forward to the response from the group she has set up and from the actuarial review as well. I hope we can revisit this in the coming months.

Joan Burton (Dublin West, Labour)
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This time last year we were in the run-up to voting day of the general election. One of the most memorable features of the election campaign for Members on all sides and one of the saddest things was the number of people in construction who were involved in good firms which gave good employment and who found that everything had disappeared. Many of these are the people to which Senator Landy has referred. Senator Landy also raised the possibility that people might be allowed to make a voluntary contribution, amounting to the current total of the employer and employee's contributions. That merits examination because the distress level of self-employed people can be very high. Also, many of these people ran good businesses and worked hard, particularly those with a construction background, during the boom. It is important we help them as much as possible to get back on their feet. I will return to the Senator with information when I have the actuarial evaluation and the report of the advisory group. I am grateful the Senator has acknowledged that in the current climate there are cost issues of which I must take account.