Written answers

Tuesday, 10 February 2015

Department of Social Protection

Social Insurance

Photo of John LyonsJohn Lyons (Dublin North West, Labour)
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193. To ask the Minister for Social Protection her views on further supports for self-employed persons who have lost their business and become unemployed; if an opt-in higher rate of pay related social insurance for self-employed persons will be considered so as to allow greater social welfare protection in the event the business fails; and if she will make a statement on the matter. [5945/15]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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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) as well as guardians payment (contributory), maternity benefit and adoptive benefit.

Self-employed workers who have lost their business and become unemployed may access social welfare supports by establishing eligibility to assistance-based payments such as jobseeker’s 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. As in the case of a non-self-employed claimant for jobseeker’s allowance, the means of husband/wife, civil partner or co-habitant will be taken into account in deciding on entitlement to a payment.

Self-employed people in receipt of jobseeker’s allowance have access to the full range of activation measures available through the State. Given the scale of unemployment levels, the key objective of activation policy and labour market initiatives is to offer assistance to those most in need of support in securing work and achieving financial self-sufficiency. This policy objective prioritises scarce resources to those in receipt of qualifying welfare payments. Accordingly the employment services and schemes provided by the Department are focused in the first instance on this cohort of unemployed people. However, many services are available to the formerly self-employed who are not in receipt of a social welfare payment.

Some employment services, such as assistance with job-search activities and the use of online job search tools, are available to people if they register with the Department’s employment services offices, regardless of their social welfare status. Unemployed persons, including the previously self-employed, not in receipt of payments may also be eligible to avail of up-skilling opportunities but are not eligible to receive a training allowance while undertaking the course. Springboard courses are open to people who were previously self-employed, regardless of their social welfare status.

In September 2013, I published the report of the Advisory Group on Tax and Social Welfare on Extending Social Insurance Coverage for the self-employed. The Group was asked to examine and report on issues involved in extending social insurance coverage for self-employed people in order to establish whether or not such cover is technically feasible and financially sustainable, with the requirement that any proposals for change must be cost neutral.

The Group found that the current system of means tested jobseeker’s allowance payments adequately provides cover to self-employed people for the risks associated with unemployment. In this context, the Group noted that almost 9 out of every 10 self-employed people who claimed the means tested jobseeker’s allowance during the three-year period from 2009 to 2011 received payment. Consequently, the Group was not convinced that there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker’s benefit.

On the basis of the findings of the report of the Advisory Group I am satisfied that the self-employed have access to income support in the event of business failure and I do not propose to make any changes to the PRSI system at this time. I will keep the situation under review.

In general the current system of social insurance operates on a mandatory basis and therefore contributors pay PRSI contributions at the rate appropriate to their PRSI class. Allowing people a facility to opt in or opt out at their own discretion could lead to the selection of bad risks. The whole principle of social insurance is social solidarity where everybody pays in and, if needed, cover is available.

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