Deputy Penrose has tabled Questions Nos. 14 and 15. If we use the time efficiently, we may reach Question No. 15.
Thursday, 30 May 2019
Oral answers (9 contributions) (Question to Employment)
14. Deputy Willie Penrose asked the Minister for Employment Affairs and Social Protection to outline the status of the proposed expansion of the net eligibility for those self-employed persons who account for 14% of workers; her views on whether self-employed persons should contribute more in view of the differential between the 4% self-employed rate and the combined 14.95% for PAYE employees; and if she will make a statement on the matter. [22916/19]View answer
I acknowledge the developments and improvements that have been made for self-employed people to date. I am one of the self-employed. They provide an important safeguard and safety net for self-employed persons. The extension of a suite of benefits to people who provide thousands of jobs throughout the State and form the backbone of many small and medium-sized enterprises is especially welcome. I am keen to ascertain what further plans the Minister has for the self-employed sector.
The new scheme for self-employed persons, which I announced as part of the budget last year, will extend social insurance contribution-based benefits to those who are self-employed in circumstances where they become unemployed. This measure is only part of the Government's stated aim of creating what should be a supportive environment for entrepreneurship, including providing an income safety net to both employees and self-employed persons. The scheme will be introduced in November 2019. It builds on other significant improvements for self-employed persons in recent years, such as giving people access to invalidity pension and treatment benefits from 2017, both of which have been highly successful.
Many of the features of the existing jobseeker's benefit scheme will apply to the new scheme, such as its duration and rate of payment. Applicants will have to satisfy the qualifying conditions for the new scheme, including PRSI requirements. The statutory conditions for the scheme are being finalised by officials at this time as part of the legislative process.
The Deputy asked about the rates of PRSI. Self-employed persons pay a personal rate of social insurance that is exactly the same as that paid by people who are employed. There is, however, no equivalent to the employer contribution paid in respect of people in normal paid employment. The question, therefore, is whether a self-employed person, for example, a painter, electrician or carpenter, should, in addition to having to pay the personal rate, also pay the employer rate. My view is that introducing an additional charge of approximately 10% on self-employed persons is not a decision that anyone should take lightly. I am minded that most self-employed persons are not rolling in money. They are not high earners. Most only earn in or around the average industrial wage and are involved in trades or personal services, such as taxi services. On the other hand, I am also minded that the differential in contribution rates can give rise to unwelcome behaviours. Such behaviours were highlighted in the conversation we had about bogus self-employment. Therefore, while I have no immediate plans to apply an employer contribution to self-employed earnings, I am genuinely open to suggestions and to reflecting on how some other European countries and Canadian provinces have addressed this issue.
The question of how best to fund the Social Insurance Fund will be raised in a consultation paper. This issue will become more pertinent as the years go by. We know that if we do nothing, the Social Insurance Fund will run into trouble in the coming years. At the back of my mind is a contractors' tax, as implemented in Ontario or Portugal. That is something that would perfectly suit the environment.
The issue will have to be addressed. As someone who would benefit from it, I understand that. Employers may be looking at 14.9% and that will be something of a differential. Certainly a 10% levy could not be imposed. However, there has to be some view on how to extend the benefits. We know 6,500 individuals will benefit in November. The figures are significant and the benefits will be paid at the maximum rate of €203 for those who qualify under the dependant rate and the child dependant rate of €34. It is wonderful because until now only the jobseeker's allowance was available. We had vigilant inspectors. Many self-employed people were harassed to the point of giving up.
It was all about assets.
It was about assets, as well as things that disappeared like the snow last winter. People were looking for last year's money now. God bless us, asking people to account for last year's money now is crazy. Full access will be provided to the existing range of employment supports. I know the Minister will aim for that and there will be PRSI tests and access to payment. The issue is that in order to extend it the Government will have to find some other source of income and PRSI payment. A conversation will have to be had and we will have to examine other areas. I want to see every benefit extended but we will have to pay for it somehow. Let us be truthful about it.
I concur with Deputy Penrose on how difficult it was to satisfy the means test for the allowance that was made available some years ago.
That is why the new legislation relating to the new jobseeker's benefit for the self-employed is exceptionally simple. It should be simple. The arrangement should be exactly the same as that for employed persons. The question of how best to store up or secure the social insurance fund will be raised as part of a consultation paper the Department will release later this year. There are new and emerging models, such as a new PRSI charge payable in respect of dependent self-employed persons who are entirely different from a painter, plumber or taxi driver. These models should be considered when a dependent employee engages primarily with one end user. That should be relatively easy for us to do in the short to medium term. When the consultation paper is circulated later this year, I will value all the Deputy's thoughts and considerations.
I am very eager to see the self-employed covered. They had an horrendous time in the recession, when this all came into focus. I was advocating for and arguing the case of the self-employed for a long time and I did not make as much progress as I had hoped. Fair play to the Minister; she grabbed this ball, on which I compliment her.
I agree with the further extension of benefits to workers who are genuinely self-employed. I am concerned, however, that the extension of the suite of benefits and entitlements to which genuine self-employed persons are entitled to ensure they will never again have to face what they experienced previously might create further incentives for employers to falsely classify workers when there is little substantial difference in benefits. That is the issue. We have to be honest with one another and stop people going out saying there is an attack on the employed or self-employed; we have to make sure people are treated equally. The one thing we do not want to have is somebody who is employed and paying a lot saying he or she would be better off self-employed. We do not want those who are genuinely employed dumped into self-employment because employers do not want to pay their rate. That is what could happen. I am just sending a warning.
The Deputy is absolutely right but we need to strike a balance such that when we include the enforcement powers in respect of what we do not want people to do, they really work, in addition to our introducing employment rights and contribution payment rights for the self-employed. The Deputy is correct that there is a balance to be struck.