Freefall: from self-employment to unemployment

‘You drive around the country,” says Ray Butler, the Fine Gael Senator, “and look at all those closed-down shops in little towns and villages. They represent lives and families and people’s stories. They’re all self-employed people. There’s a huge story to be told about what happened to people over the last eight years that I think has been pushed under the carpet.”

Butler knows first hand “the grief of closing down a family business”. In 2010, after 24 years running a shoe shop in Trim, he found himself negotiating a forbidding social-welfare system. He wouldn’t have made it through, he says, without his family rallying around.

As a politician he has become a bit of an advocate for the self-employed. Self-employed people who have no work or who are too ill to work pay a different class of tax from employed workers, so they are not entitled to the jobseeker’s benefit and illness or disability payments that many others take for granted.

Instead they have to go through an often-prolonged period of means testing before getting anything. Some are then offered minuscule payments, or none, because of the income of their spouse, their pension investments or, in Butler’s words, the supposed value of “a bit of a machine gathering rust in the yard”.

The difference in treatment, says Mark Fielding, chief executive of the Irish Small and Medium Enterprises Association, is a legacy of an era when the self-employed were seen as people of means.

About 325,000 Irish citizens are currently self-employed, and most are not people of means.

Fielding thinks that the current situation deters people from self-employment. As this writer knows from previous personal experience as a freelance journalist, self-employment adds a layer of anxiety to life when business is bad.

There is a vague commitment in the programme for government to changing the status of the self-employed, and Minister for Social Protection Leo Varadkar has just announced a survey of 20,000 self-employed people, to see what benefits they feel they need and what pay-related social insurance, or PRSI, payments they might be willing to make.

The nature of the change may be controversial. Fielding is for reform, but he feels that any additional payments should be voluntary.

Ray Butler has a different view. “Voluntary contributions to social welfare don’t work,” he says. “We’ve seen that before . . . If it is to work successfully it has to be mandatory.”

Some are worried that this survey is a delaying tactic that will end with no real changes. Fielding believes that it’s ludicrous to ask self-employed people questions about PRSI rates that are better answered by the experts in the department who have actually done the sums.

Butler is more optimistic. He believes that a survey like this has been a long time coming.

“Many a self-employed person went down into a dark place and dark fields and never came back, because they couldn’t provide for their family and put food on the table,” he says.

Here are the stories of some self-employed people who have experienced the system as it currently operates.

Rose: ‘I was very ill and felt so let down by my country’

Rose had been working for 30 years as a self-employed physical therapist when, in 2012, she was diagnosed with breast cancer.

“In 30 years I’d never been on the dole, never drawn money from the State, always paid my taxes,” she says. “This changed everything.”

Her family had been severely affected by the recession: her husband, from whom she was separated, had a struggling architectural practice – “That business was really hitting the wall in 2012” – they had a huge mortgage, dating from “the good times”, that they were already struggling to pay, and they had two teenage children (one doing the Leaving Certificate). And then Rose found herself unable to work.

Rose had to have a mastectomy. There were complications. Further surgery was required, and she had to undergo chemotherapy. In the end she needed to take a full year out. She didn’t know then, she says, how few benefits she was entitled to as a self-employed person.

“I was quickly told I had no entitlements whatsoever,” she says. “None.”

Rose spent days on the phone to people at the HSE and the Department of Social Welfare, trying to negotiate a medical card and some form of payment.

“Some people were very sympathetic, because I was so ill,” she says. “I was on chemotherapy, and my whole system was very low. I found it so hard to even talk on the phone. I was always breaking down on the phone, crying. I was often in floods of tears, so distressed.”

She had no money. She couldn’t afford food or even some of the medication she needed to take before chemotherapy. She wouldn’t have survived, she says, without her family, “who aren’t that well off themselves” but who put money in a bank account for her. She recalls once finding €100 that a family member had left in the house without saying a word. She is still moved by this even after four years.

Rose eventually managed to apply for disability benefit, a process that involved endless interviews, red tape and paperwork – “accounts going back years” – after which she was told it would take at least six months for her application to be processed.

“The lady in question was horrible,” she says. “I got very emotional. She said, ‘Pull yourself together, we don’t have time for this sort of behaviour,’ and threw a box of tissues across the table.

“She treated me as if I was really trying to swindle the State out of funding. I couldn’t believe they’d treat someone like that. You should be able to get support without having to feel like a criminal . . . I was made to feel like I was making up a story.”

Rose stresses that she spoke to a lot of officials over the course of a year and that many were kind, if not always able to help. “Though I really think people who are public servants have no clue what it’s like to be self-employed when things get difficult,” she says.

The disability payment was finally granted, she says, as was a temporary medical card, but only when she was getting back to work again, after a year with no means of support.

Rose is pleased that the system may be reformed. She would definitely, if it were possible, make any additional PRSI payments that provided her with a safety net.

Through her work she meets a lot of PAYE people who have had to cope with illness and injury, she says. “I’ve met teachers with breast cancer, and the way they are supported by the system is amazing.”

She has come to the conclusion that self-employed people are discriminated against.

During our conversation Rose stresses how lucky she feels to be working again, but when recalling that year she is often moved to tears about the effect it had on her and her children.

“I was very ill and felt hung out to dry. I felt so let down by my country. I could see other people coming in getting unquestioned State support, and as someone who had always worked and paid their taxes I was thrown to the wolves.” She sighs. “That’s how it felt, anyway.”

Joe: ‘They said, You’ve the wrong stamps, good luck’

In 2008 Joe Harris, a Cork county councillor, watched “the slow-motion car crash” that would ultimately destroy his auctioneering business.

“By the end I could see it coming,” he says. “Confidence went out of the market very quickly, and there was a kind of domino effect. People pulled out of deals. An auctioneering firm can’t just close down – there are legal ramifications dealing with people’s properties . . . It’s not easy to land the plane.”

The moment finally came when the bank called him in to say that it couldn’t honour his overdraft. He had five offices and employed 30 people. “I had a big wage bill, no cash flow. I knew the game was up. It’s hard to describe the shock.”

He didn’t, like other self-employed people I’ve spoken to, delay going to social welfare, but he quickly discovered that, although he had been paying himself a salary through his business, he wasn’t registered for the correct PRSI payments.

“It was a mistake,” he says. “They said, ‘You’ve the wrong stamps, good luck.’ ”

They didn’t give any advice? “No. I went around in a daze for a while until eventually someone said, ‘Go down to the community-welfare officer, and they’ll give you money while you apply for jobseeker’s allowance.’ ”

The community-welfare officer was good, he says, and the means-testing process that ensued led to some payment, but he has since met self-employed people who were denied any sort of payment because they had land or an unrentable property that was, on paper, worth money.

“It was a pretty brutal system. There was always a thing in Ireland where you thought there was a safety net. All of a sudden it was more like America, and there was no safety net here.”

He talks frankly about how it affected his mental health. Self-employed people, he says, often build their identity around their business. “I wasn’t well for about six months . . . I couldn’t even get out of bed, never mind deal with the social-welfare system. Losing a business feels like the end of the world. But it’s not.”

Still, the consequences linger. This year his home was repossessed by the bank. “The banks held off for a while, because there was no point repossessing houses when you couldn’t sell them, but more of them are moving in in the last couple of years.”

He thinks that the plight of destitute self-employed people has been ignored. He welcomes the Minister’s survey and supports the idea of some sort of increased PRSI payment for self-employed people in return for increased protection. “I think most self-employed wouldn’t have an issue with that,” he says.

He also says that the country needs more social workers. At his bleakest, he says, he needed a social worker as much as anything. “There’s nothing for self-employed people [in that situation], no advice. Only for family and friends I wouldn’t have survived it.”

In recent years he’s found a calling helping those in similar situations, and he ran in the local elections in 2014. (He did so less successfully in 2004.)

“A large part of my work over the last number of years has been dealing with people in this situation and taking them through the bureaucracy of it,” he says. “They’re in shock and confused and nervous and scared. I take them through that because I’ve been there myself.”

Jean: ‘I was left high and dry’

Jean, a self-employed healthcare professional for more than 15 years, injured her back in a car accident a few years ago and has been unable to work in her former profession since then. “I quickly found out that there was no [social welfare] available to me, despite having paid the highest level of tax for a very long time, because I was self-employed,” she says.

She didn’t even bother trying to get the means-tested jobseeker’s allowance, she says, as she was told that her husband’s income made it impossible. She says she knows she is very lucky she had a husband to fall back on. “I know I’m a lot of more fortunate than other people. If I was the only breadwinner it would be a lot worse.”

It has had huge consequences. “It was a total change in lifestyle. I don’t mind forgoing new clothes and going out for dinners. That was gone and totally fine.”

She was more troubled by knock-on effects, such as her inability to keep paying for a carer for her elderly parents or to access maternity benefits when she had a baby.

She has tried to keep busy. She signed up for a Springboard education course, at a job fair at Dublin Castle, “but I encountered a lot of difficulties getting on to that,” and she hopes to find a job soon.

She had never considered the downside of that. “It was what all my colleagues were doing, and you could set your own hours, and I liked that,” she says.

Would she opt for self-employment again? “N-O”, she says, enunciating the letters. “No. Definitely not. I like to think I learn from my mistakes, and I was left entirely high and dry. I’m looking for a nice secure PAYE job now. There’s no security [in self-employment], especially for women . . . For a younger lady considering a family, PAYE is definitely far better.”

Would she have been willing to pay more PRSI in return for more benefits as a self-employed person? “I don’t know,” she says. “I was paying 50 per cent tax, and this is a terrible situation to be in having paid all that tax . . . I know compared to other people you talked to I’m not on the breadline. I have my husband, but that’s a very Jane Austenesque situation for a woman to be in in this day and age. I never thought I’d be in a position where I’d be relying on a man.”

Gerard: ‘I was 57 and didn’t exist in the system’

Gerard has been a sort of unofficial campaigner for “all unemployed people” for several years, writing letter after letter to different politicians. Most, he says, send “cut-and-paste” replies, although he singles out the Fine Gael TD Ray Butler and the Independent TD Maureen O’Sullivan as honourable exceptions, “despite me not being a constituent”.

Gerard had been a self-employed sales agent for 15 years until the recession put an end to his business. This was the first time he went to seek assistance from the social-welfare system, only to find out that he was due nothing. He was depressed and “twice walked down as far as the social-welfare office before I walked in. I think a lot of people, when a business fails, feel a sense of shame, and then when you go in and they turn you away it’s devastating. I think I actually cried.”

He subsequently studied construction management and worked for 12 months in a physically strenuous PAYE job “until my hands started acting up . . . So technically speaking I’m not a former self-employed person, I’m a former PAYE worker who didn’t have enough PRSI credits.” After years of self-employment “you have to work for two years in order to get yourself back into the system”.

When he went to the social-welfare office this time he knew that he wasn’t entitled to money but hoped that he might get some employee credits. He hadn’t realised that he had left too much time lapse.

“The lady was quite nice, but I was a bit upset. On the way out I passed all of these people who had been in Ireland for only two or three years who were queueing to get the full range of benefits. I was aged 57 and I officially didn’t exist in the system. I wrote one letter to the Minister, and my letter writing went on from there.”

Gerard doesn’t qualify for unemployment benefit, and because of some investments “that were meant to provide a pension for me” he wasn’t considered eligible for jobseeker’s assistance. “You have to sell what you have to get down under the limit, and then you have to prove to them how you spent it all,” he says.

What Gerard wants above all is a role in society and access to the job-activation measures that are open to the unemployed. “If you’re not registered on the live register you can’t access anything,” he says. “In 2013 the Minister’s own advisory committee recommended that all job-activation measures be opened up to those not able to access them.”

Recently he went abroad, partly to look for work, and he realised that he felt more comfortable outside Ireland, where people weren’t always asking, “What do you do?” Abroad, he says, he was simply a runner – running is his hobby – or a tourist, “but when I came back into Cork Airport I was a nobody”.

He sighs. “I’m divorced, living on my own, getting old. If we were discussing Travellers or gay people or any other group there’d be a full public discussion about how things impact on their health and mental health, but I have failed to persuade politicians that there’s a human-rights dimension to not giving access to retraining or education to people.”

What would he like to see change? “I would like to see one definition of unemployment that takes in everyone who’s not working and is looking for work. I should be on the live register and able to access any of the job-activation measures. I feel stuck in a hole with no way of getting out of it.”

In the meantime he’ll continue writing to politicians. “Sometimes I’ve nearly persuaded myself to stop,” he says. “But then I think about it again,” and the situation is “so illogical I have to keep at it”.