Focusing on the self-employed

The following article was published in the Irish Independent on October 24th and can also be read here:

I grew up over the shop. My dad was the local GP, my mother the practice nurse and manager. The practice was our converted garage. Until we moved to an extended house, my dad’s patients would come to our front door, and our sitting room doubled as a waiting room during surgery hours.

I learned a lot about hard work from my parents’ experience of running their own business. And I was impressed by the effort that my uncle put into his farm in Waterford.

These are stories that so many other self-employed people will recognise. Long hours, hard work, considerable financial risk offset by the freedom of being your own boss, the pleasure of doing the work you love and, if successful, the possibility of a good income and an asset that could be passed on to your children.

But there were other drawbacks. They hardly ever took a sick day. It just wasn’t practical. You needed to find someone to provide cover, and you also lost income if you couldn’t work. Things that we employees take for granted, like a day off for a family occasion or a half day for a funeral, taking holidays or a few months maternity leave, are often impossible.

And there is always the worry that illness or injury will prevent you from working, or the fear of what would happen to the business or your family if you died.

I have always had immense respect for the self-employed, all 350,000 of them: tradespeople, professionals, taxi drivers, farmers, small business owners and sole traders. I have always wanted to do something for them and now that I am Minister for Social Protection, I can.

Last week’s Budget was a major step forward for the self-employed. Michael Noonan increased the earned income tax credit by €400, which allows self-employed people to earn another €2,000 every year free of income tax. Within a few more Budgets, self-employed people will have the same tax credits as employees. A decision was also made to extend the Start Your Business Scheme by another two years.

In my own Department, I decided to allow people who are unemployed or on welfare to apply for the Back to Work Enterprise Allowance after nine months, rather than a year. This allows people to keep some of their weekly welfare payment while they get their business up and running and into profit.

We will also provide up to €4.5 million in Enterprise Support Grants to help with the costs of setting up a business, like buying your first set of tools as a barber or plumber, or the cost of registering your new website. Some 3,631 people have received grants this year so far and we expect 5,500 more will in 2017. Welfare should be a safety net or a second chance, not a way of life. And the Back to Work Enterprise Allowance is that second chance for so many people.

Perhaps the most important change is extending more social protections to the self-employed. Self-employed people pay PRSI at Class S at a rate of 4% of their income or profits. This provides for a State pension on retirement of up to €233.30 per week, increasing to €238.30 per week from March 2017. There is no means test, and it is paid on top of any other pension, savings or income. You may also qualify for an increase depending on whether your partner has any earnings or income.

If a self-employed person dies before reaching retirement, the pension goes to their survivor, who could be a widow or partner. Since September, we also provide for up to two weeks paid paternity leave.

From March, I will extend new benefits to the self-employed starting with Treatment Benefit, to cover the cost of regular dental and eye exams. Subject to an agreement with professional bodies, it will also provide subsidised hearing aids from the spring, and subsidised eye glasses and basic dental treatments from the autumn. While many of these benefits were available to employees in the past, they have never been available to the self-employed. The benefits will also extend to partners.

Before the end of 2017, I will also extend eligibility for the Invalidity Pension to the self-employed. Under this scheme, anyone who has been paying into the Social Insurance Fund for more than five years and develops a long-term illness, or sustains a serious injury that prevents them from going back to work, will be covered and could qualify for an invalidity pension. Once again, there is no means test, and you will not be penalised because you have some savings, an asset, or a partner with their own job. This should come as a great relief to self-employed citizens who currently have to take out expensive income protection policies or have no protection at all.

Throughout 2017, my Department will also do detailed work on Jobseekers Benefit and how we might provide a better safety net for self-employed people whose business fails, hopefully for the next Budget.

I believe these reforms value the contribution that self-employed citizens make to our society and economy. I believe it will also encourage more people to consider self-employment or becoming an entrepreneur in the knowledge that there is a safety net for them if things don’t work out. I also believe it will help to strengthen the contributory principle underlying social insurance and PRSI. Namely: that everyone pays into the fund, and is eligible for something in return.

There are many ways that we can continue to help the self-employed, and it’s a complex area. It can be difficult to know which options for Budgetary change are the best options. However, I’m guided by the experience of my own parents, my uncle on the farm, and the many people I have met over the years who work hard and contribute so much to this country. And I do it for them.