The tax system is facilitating bogus self-employment “at the click of a mouse” allowing employers to escape having to pay workers their entitlements.
That is according to a report that will be published today at the annual conference of the think-tank Tasc in Croke Park, Dublin.
The report examines the quality and quantity of jobs here and focuses on the hospitality, construction, financial services and ICT sectors.
In the construction sector, it finds that many employers have reduced direct employment and outsourced as much work as possible.
“In their turn, sub-contractors outsourced work so that sub-contracting chains lengthened,” the authors of the report James Wickham and Alicja Bobek said.
“There has been a dramatic growth in the proportion of craft workers who are self-employed. Many of these are ‘bogus self-employed’: they have been compelled by their employer to declare themselves self-employed. This saves the employer wages and taxes, but the self-employed lose some social welfare entitlements.”
Mr Wickham said the tax system seems to facilitate ‘employers’ designate the recipients of contracts as self-employed with no consultation. “In 2006, just under 25% of construction workers were self-employed, in 2015, it was 38%, and many of them are what are termed ‘bogus self-employed’. They are like any other employee: they are working under someone else’s direction, they don’t have their own equipment and don’t supply materials, they certainly don’t employ anyone else. However, thanks to the Revenue’s Relevant Contracts Tax, they magically become their own bosses.
“The Revenue’s online system allows employers to become principal contractors, and employees to become subcontractors literally at the click of a mouse. Providing the principal has the subcontractor’s name and tax number, no active consent from the subcontractor is even necessary.”
The authors found many labourers and general operatives now work for agencies where hours are irregular and earnings fluctuate.
“Jobs that were traditionally good jobs, in the sense of providing relatively good wages and regular if not necessarily secure employment, have become casualised. Indeed, a consistent and depressing theme from our interviews with older workers was that work in the building industry is not something that they would wish to do again.”
The report finds hospitality workers are amongst the lowest paid. In 2015, the average weekly wage in the accommodation and food services sector was €324.86, only just over half of the national average of €697.52 per week.
“The sector increasingly relies on part-time employment,” the report states. “In 2015, 41% of workers were employed on a part-time basis, compared to approximately 37% in 2009. This share was significantly higher than the national average, which stood at 23% at the end of 2015. People are offered zero hours work through so-called ‘if and when’ contracts which make employees vulnerable to changes in hours and income. Even though they are officially under no obligation to accept additional hours, the employer often (unofficially) forces them to do so.”
In the financial services and ICT sectors, the report finds that while most jobs are well paid, “short-term and temporary employment in these sectors has expanded with mobility now being imposed on many younger workers”.
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