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Self-employed treated like "second-class citizens" in social welfare system - ISME

ISME is calling for self-employed person to have the option of paying a higher rate of PRSI in order to entitled them to the same social welfare payments as their PAYE counterparts.

Image: Mark Stedman/Photocall Ireland

THE SELF-EMPLOYED ARE treated like “second-class citizens” in the social welfare system, an Oireachtas committee has heard.

Mark Fielding, CEO of the Irish Small and Medium Enterprise Association (ISME), said the current method of assessing self-employed persons who have become unemployed is “completely unfair” and “based on antiquated, bureaucratic and cumbersome legislation”.

“There is something badly wrong with a system that provides automatic welfare entitlements to employees in the event of a company closing,” he said yesterday, “but will not give a red cent to the company owner, leaving thousands of individuals and their families penalised, humiliated and on the breadline.”

Means tested

Under the current system, self-employed persons are fully means tested, involving assessments of savings, their cohabitant’s income, the value of any property owned, and the potential to still receive earnings from their area of work.

For Jobseekers Benefit, a PAYE employee who has accumulated sufficient PRSI contributions, there is an entitlement to a social welfare payment for a set period of time.

After this, or if an unemployed person does not have sufficient credits, they are means assessed for a Jobseekers Allowance payment.

This will include similar assessments to a self-employed person.

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ISME is calling for the adoption of a similar system to what exists in other EU countries, where the self-employed or proprietary company directors can pay a higher rate of PRSI if they wish.

This higher rate entitles them to “equal status if injured or unemployed”.

Currently, the self-employed rate of PRSI is 4 per cent, sufficient to cover an entitlement to the state pension.

A rate of over 15 per cent is required for Jobseekers payments.

Read: Jobseeker payments expenditure to fall by as much as 20 per cent >

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Nicky Ryan

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