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THE COMMITTEE FOR Social Protection today said the issue of access to welfare for self-employed workers was being considered by the government.
The committee heard from the Self Employed Alliance Dundalk (SEADK) who said that there has been “unjust, unwarranted discrimination” against self-employed people in this country.
Kevin McArdle of the SEADK told the committee that the issue has become serious in the last few years due to the economic downturn and his organisation wanted equality for self-employed people in the payment of PRSI.
Former self-employed worker Fred Matthers expressed is frustration at “the sense of unentitlement and the bureaucracy”. He said his adult children had been denied grants because of his perceived earnings and said he had left his local VEC in tears when he went to get information about entitlements.
“I find it very humiliating,” he said. “Self-employed people should not feel like you’re some kind of second class citizen in the state.”
Contributions
Currently, self-employed workers who pay Class S PRSI are entitled to widow’s pension, guardian’s payment, state pension, maternity benefit, adoptive benefit and bereavement grant. They are also entitled to jobseekers allowance based on a means test of earnings from the last 12 months.
Fianna Fáil TD Willie O’Dea said there needs to be more clarity on the welfare payments that the self-employed are entitled to.
“There’s a widespread perception that once you’re self-employed, you have no access to jobseekers and in my own area I have to say that perception is encouraged,” he said.
O’Dea said the system of means testing based on a person’s earning in the last 12 months was “perverse” as earnings for a self-employed person can be erratic.
Representatives of the Department of Social Protection said figures from a KPMG actuarial review of PRSI last month estimated that the cost of of extending jobseekers benefit to self-employed people could cost up to €87 million euro in 2013.
In order for a person to receive the contributory pension and jobseekers benefit they would be required to pay 16 per cent PRSI and if invalidity pension is added to this, a self-employed worker could be required to be up to 17.3 per cent.
Teresa Leonard of the Department of Social Protection said local authorities were aware of the downward trend in the economy and have been asked to take account of that when assessing social welfare entitlement.
Leonard said certain areas have not been finalised as the committee is continuing to review the issue and it will submit its report when their examinations are complete.
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The biggest unfairness is that someone could have paid full PRSI as an employee for 25 years, they then set up their own business and have no automatic entitlement to the dole. Meanwhile dossers who have never worked a day in their lives claim away. Sure it’s a grand little country altogether.
dead right Reg, it seems when you try to better yourself and possibly employ people you could end up the loser and at the same time if you do nothing you could benefit more from it, we need to encourage all people to better themselves and we need the goverment to help in everyway possible
@Reg,
Dead right! I’m in my second year trying to be self employed to stay away from social welfare. I’m determined to make it work for two reasons, I’m passionate about helping others and I’ve put what was left of my redundancy and savings into it and I’ve no intention of walking away yet!
It’s about time this Government, now they are in power, does something for the self employed that looses everything they’ve worked bloody hard for and stop treating them as second class citizens. As self employed people we pay huge taxes, we pay our way just like paye workers.
so true
The government’s primary duty is to govern the country. Included in that overall objective is to create the conditions for employment creation. Governments don’t create jobs but rather they try to foster the necessary conditions for such.
Here’s the thing, you’ve an army of under used people with experience of setting up and running businesses, you’ve a government (supposedly) determined to encourage start ups in Ireland, the self-employed are people with the knowledge to help guide and mentor people starting on this path. So forget putting them on a jobseekers allowance, put the on a jobsmaker allowance instead!
Ps. And you might want to consider putting recent graduates into a similar programme i.e intensive entrepreneurial, stick groups of recently graduated engineers, designers, scientists into some of those empty NAMA houses, hook them up with some of these former self-employed people (hell they’ll probably add value to the areas by upkeeping them, similar thing happened in New York in the 70′s when artists moved into run down areas, bringing in investment and money, see also east and west London for a more recent example of this), keep paying them the dole, and let them do what they’re capable of instead of mindlessly asking them to hunt for jobs that don’t exist to stop mass emigration and the billions we put into third level education leaving through our air and sea ports.
Both worthy ideas. However of course a Jobsmaker Allowance would lead to unhappiness from those on the Jobseekers Allowance re unfairness and the qualifications/experience necessary to be defined as a “Jobsmaker”. But I’d love to see something like this happen.
It’s the government that needs to create jobs. It’s their primary duty.
The Govt in the 2000s did that by employing loads more civil servants. Everyone wants rid of them all now.
No paddy. The government need to create the environment for small and medium enterprise to flourish eg not strangling employers with more employers PRSI and upward only rents eg. These alone are pushing SMEs out of business and jobs are being lost not created.
Paddy, have you missed the point? All the guy is looking for is equality between employed and self employed. Nothing more. Seems fair.
Government’s duty to create jobs? Are you mad? The government has no duty whatsoever to create jobs. I thought that Marxist Manifesto was trialed in the USSR already!
If self employed people treat themselves as employees for tax and prsi purposes in their enterprise they will be treated the same as most employees. Paying a very modest wage would be enough. They may need to be shown how to do that and it may have high costs such as paying full prsi (employer and employee) and operating as a limited company. The self employed treat themselves differently when their businesses are good by paying a limited prsi contribution.
Terry, you really need to educate yourself about the self employed/business owners and PRSI. You don’t have a choice when it comes to PRSI.
…or the PAYE tax credit.
Terry you don’t get taxed on your wage as self employed. It’s the net profit of the business. If you factored in a wage (which you are not allowed to do) for yourself in most cases you would you would probably not continue in business. Most self employed I know are working a minimum of 60 hours a week and if you divided that by their net profit it would be below min wage in a lot of cases. You should learn how the tax.system works before making statements about something you obviously know nothing about
Also plenty of self employed people don’t have a business, they’re operating as sole traders/contractors. The idea that all self employed people are operating in SMEs is a misconception.
@Terry Turner
Educate yourself and read about the self-employed. They work bloody hard 24/7 they have a lot to loose if they don’t. If they didn’t pay the going rate for experienced and no experienced staff they’d be reported, which is right. Many people who have tried running a small company to keep themselves off social welfare have no wage for a long time until their small company goes into some kind of profit, maybe not even ’til the 2nd/3rd year running. They live at their wits end and on any savings that they might have in order not to fold the company that they spent Eur1,000′s on setting up.
Self employed people do not deserve to be left out. They play their part in paying taxes etc. They’ve given employment and what do they get when their company belly flops because of the greed by others and recession? Nothing, absolutely nothing.
I was a sole trader and I got full job seekers benefit. So who needs the education?
I was a sole trader and I got full job seekers benefit when i stopped working in a sole trader capacity. I had been employed a few years previously. So who needs the education?
Provided they dont increase the S rate of PRSI, i like being self employed and I dont think ill ever need social welfare , if its an option some want to take then alright , aslong as I dont have to pay more for something I wont use
things change all the time and u may find ur self needing this service (hope not) but it would be great if all people can avail if they really need it
I am sick in tired of politicians hiding behind the Class S rubbish as they never say that self employed should get help as they pay more income tax as they do not get a PAYE tax credit. Self Employed Tax Credit is €1,650pa compared to €3,300pa for their employees. They get the rest of the money out of us but call it something else.
Dead right about the PAYE tax credit Eugene, it really pisses me off. Especially at the moment when my business can’t afford to pay myself that much and I have to pay € 1650.00 more in income tax than if I was an employee.
Reg, become a paye tax payer and you will get the allowance.
But I am a PAYE tax payer Terry. The company pays my taxes through the PAYE tax system same as for the employees. But as a small business owner I am not entitled to the PAYE tax credit. The country likes to have more than one way to screw small business owners!
Reg, I supposed you have appealed the decision that you are not allowed the paye tax credit. It seems to me that everyone in the paye system gets it. I know the case of pensioners who have no other income but have extra income from other sources both getting the paye allowance. I was self employed for 5 years and always received the paye allowance for my wife, who worked and myself. From the government site
“If you are in employment, tax on your income is deducted by your employer on behalf of the Revenue Commissioners. This system of deduction is known as the Pay As You Earn (PAYE) system. All PAYE taxpayers are entitled to a tax credit known as the PAYE Tax Credit. This is worth €1,650 in 2012. If you are married and taxed under joint assessment, then you and your spouse may both claim the PAYE Tax Credit.”
We did check it. If you are an owner director with more than 15% share holding then your not entitled to the PAYE tax credit. Not on a PC at the moment to post a link but I’m 100% sure that this is correct.
Here’s the link from the revenue website
http://www.revenue.ie/en/tax/it/credits/paye-employee-credit.html
Reg, you are correct about company directors income. If a person sets up a company he/she is no longer a sole trader as far as I can see. There is no need to be a director in many cases. I am sure you know that you can set up a business without setting up a company. Anyhow, I am retired and not concerned directly. Best of luck in your fight to get fair treatment for all. You may realise that people who work abroad for a more than 2 years also do not get job seekers benefit if they come home and want to look for work
Don’t count on this govt for anything but perpetual austerity.
Lower the preliminery tax for starters! It is killing most self employed people. I know, i,m one of them!
It has never seemed right to me that self employed people are denied social welfare benefits. That said, I wanted to ask a question as I’m confused by some of the comments above some of which even appear to suggest that self employed people pay no taxes (!)
Do self employed people make social insurance contributions on their own behalf?
Yes they do in most cases but at a reduced rate. Most self employed/owner directors were also employees for many years but those full PRSI contributions are forgotten about as soon as they become self employed/owner directors in respect to automatic dole entitlement.
just drives me mad, sick and tired of self employed being treated unfairly. self employed people provide jobs for others, they take risks they struggle when they have no work so therefore no pay!! but their employees can just walk into the social welfare and sign on!! a married couple who are self employed lose out on approx. €1600 per year of an allowance. Self employed pay a lot more tax too!! Self employed are paying wages plus extra prsi contributions of employees to enable them to get the social welfare payment. Surely self employed should be able to bring this matter to the European Courts!!
My husband is a sole trader and when recession came over us too a while back the amount of forms to be given for a job seekers was endless; he even got send back with the Revenue income tax assessment because it did not say when the year started(although it says as standard ‘year ending 2011′ ); the nice lady at Revenue said they were playing ‘dumb’ and just liked to make people running back and forth. It is humiliating enough that after most of your adult life of supporting yourself you have to ask for states help, you are also the one whom has to tell them where exactly the law of entitlement is. On top of that, when I finished a re qualifying course, almost a year after no job luck, Fas turned me down because my husband was self employed. I tried to explain to them that self employed does not mean you work like a lunatic 24/7, 7days a week and you’re bathing in monies. I am hoping to see better starts soon; sometimes is really bad before it gets a little better! I guess that’s why hope is as delicate as the morning dew.
The following link is useful.
http://www.selfemployedsupports.ie/tax_for_self_employed_people.en.html
Note it says
Revenue will assess your liability for income tax, PRSI and the Universal Social Charge based on the information supplied by you and any amounts that you owe are paid directly to Revenue. You will be entitled to the normal income tax credits and reliefs.
sorry ned but thats not marxism….actually the only time that communism every came to exist was during the spanish civil war….china and the ussr/russia cuba were never marxist/communist but were authoritarian ruled under the pretence….the sole purpose a government is to look after its people not just be flag fliers
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