CIB launches report: Hard times for the self-employed

Wednesday, 16th May 2012

Citizens Information and MABS Experience

Citizens Information Services have seen a substantial increase in the number of self-employed people using their services. MABS also reports growing problems of indebtedness, difficulties in accessing credit and subsequent inability to meet loan and mortgage payments amongst self-employed people. Feedback and case studies from both services have informed the new social policy report: Hard Times for the Self-employed: The Citizens Information and MABS Experience published by the Citizens Information Board today and launched by the Minister for Social Protection, Joan Burton T.D.

In response to some of the information deficits identified in the report the Citizens Information Board has also developed a new website – selfemployedsupports.ie and a booklet, Supports and Information for the self-employed. These resources cover social welfare supports, explain tax implications and employment law and outline other options available. Some of the key areas of concern are outlined below:

- Absence of insurance cover for short-term unemployment and illness: The Class S PRSI contributions paid by self-employed people mainly cover long-term benefits such as the State pension. Many self-employed people are unaware that they are not covered for short-term benefits. Many feel that it is unjust that they do not have the option of paying a social insurance contribution that would cover them for periods of unemployment or illness/disability.

- Changing scenario for employment and self-employment: Since self-employment is likely to be a key component of future job creation the report points out that insurance cover may need to be extended to cover short-term contingencies like illness. It also notes that the development of a universal social insurance system to incorporate changing patterns of employment will require innovative thinking, particularly in the context of increasing pressure on the social insurance fund.

- Difficulty of assessing means: Self-employed people are not entitled to Jobseeker's Benefit or redundancy payments. However, they can apply for a means-tested Jobseeker's Allowance (JA). Self-employed people do not need to de-register as self-employed to get JA. They can continue to operate a business and work while getting JA provided the income limits are not exceeded.

However assessing the means of self-employed people can be complex. The report suggests that an additional mechanism for establishing means for JA is required. Access to JA is very important since it is a qualifying payment for access to a range of training, education and work experience options.

Welcoming the Report, the Minister for Social Protection Joan Burton T.D. said: "I recognise that self-employed people make a great contribution to the economy and have, in many cases, created jobs for other people, especially during the boom years. I recognise too that the current economic situation has been difficult for self-employed people, which is why I have asked the Advisory Group on Tax and Social Welfare to examine and report on the issues involved in providing social insurance cover for self-employed people. However, any measure to provide short-term benefits to those who are self-employed would have significant financial implications and would have to be considered within a budgetary context. An actuarial review of the Social Insurance Fund is currently underway and is expected to be completed by July 2012. This will better inform income and expenditure projections for the Social Insurance Fund."

Outlining the experience on the ground, Gerry Dowling, MABS Co-ordinator, Dundrum/Rathfarnham noted that 16% of new clients to his service in 2011 were self-employed. This compares to 10% in 2010 and 4% in previous years. A significant debt issue is inability to keep up mortgage payments. "While MABS does not deal with business debt, we are aware of the impact on personal and household income and the capacity to commit to sustainable affordable budget plans."

He added: "Not all self-employed people are captains of industry. Many are cleaners, gardeners, taxi drivers and tradespeople who are applying skill and abilities to earn a living. In the current climate they now find their income potential eroded. However, they are in a "Catch 22" situation where they need to continue to trade to provide cash for basic personal and family needs but in reality are trading more deeply into debt."

Gerry Dowling acknowledged the contribution of the newly formed CAVA (Chartered Accountants Voluntary Assistance) scheme which provides advice in business-related cases and has proved to be an invaluable referral service for both CISs and MABS. Many CIS and MABS offices are setting up CAVA in addition to FLAC and other supports. (All CISs currently provide free legal advice services from within their services through FLAC or local Solicitor panels which self-employed people can access.)

Selfemployedsupports.ie is a 'microsite' aimed at self-employed people who have seen a drop off in business and income during the downturn. Since its 'go-live' date in November 2011, it has recorded over 14,000 users and over 56,000 pageviews. It is the third microsite produced by the Citizens Information Board based on material from citizensinformation.ie. It follows losingyourjob.ie and keepingyourhome.ie in providing comprehensive information aimed at a particular target group.

Selfemployedsupports.ie addresses the information deficits identified in the 2012 CIB social policy report Hard Times for the Self-employed: Citizens Information and MABS Experience. It provides clear and accessible information on issues such as voluntary contributions, means tests for social welfare payments and entitlements under class S PRSI. It also covers secondary benefits such as medical cards and rent supplement. Additional options for the self-employed such as a return to education, training or work are also covered. A further source of information is the Supports and information for the self-employed booklet, first published in May 2011 and updated in February 2012. The PDF of the booklet is one of the most popular documents on selfemployedsupports.ie.

Copies of the report Hard Times for the Self-employed: Citizens Information and MABS Experience are available online or by calling the Citizens Information Board on (01) 605 9000 or emailing This e-mail address is being protected from spambots. You need JavaScript enabled to view it. . Supports and information for the self-employed booklet is available free of charge at your local Citizens Information Centre, MABS office, public library, FLAC centre, law centre, trade union and unemployed centre or online at selfemployedsupports.ie