Contractors are Essential to Irish Competitiveness

Refreshing. Practical. Big picture thinking.

These were my immediate thoughts on reading the Irish Tax Institute (ITI)’s response to the recent consultation on the use of Intermediary-Type Structures and Self-Employment Arrangements as published jointly by the Departments of Finance and Social Protection. It is clear from reading their response that the ITI  grasp how important professional contractors are to the future success of the Irish economy.

For many the nature of work has changed, and is continuing to change. Peer to peer business relationships, the shared economy, the gig economy, iPros, freelancing, professional contractors, whatever name you want to call it, the traditional employee / employer relationship has changed for many.

To be competitive in a global market means businesses need access to highly skilled individuals on short term project based contracts. This has created a global demand for professional contractors. The supply is met by individuals wanting to provide their skilled services when, where and how they want to; and of course for how much.        

The overriding message from the ITI’s response is that fostering a flexible labour market is vital to the future success of Ireland's economy. A flexible labour market can only exist if there is a strong contractor presence. Contractors are at the heart of flexibility.  Numerous studies have been written on the benefits contractors bring to economies. Contractors:

• Act as sources and conduits of innovation
• Increase global competitiveness for companies

• Liberate businesses from limits of their internal resources and enable the use of exceptional talent that would otherwise not be economically feasible to hire on employee contracts.
• Facilitate and reduce risk of growing
• Increase economic growth and reduces unemployment

The consultation published jointly by the Departments of Social Protection and Finance suggests that a loss to the Exchequer has arisen by individuals choosing to provide their services through intermediary type structures (i.e. such as limited companies and umbrella companies) and self-employment arrangements. As a result of this perceived loss, the consultation request paper suggests some fairly significant changes to tax and employment law which, if enacted, would have both short and long term detrimental consequences to the Irish economy.  Whether an actual loss even exists is a matter for debate and research.

The consultation request for me shows a short sighted approach and a lack of understanding of the benefits this sector has on the Irish economy, and indeed to those operating within it.

The future of work is changing and the Irish Government needs to keep up if we are to stay competitive on the global stage. Rather than trying to create more rules, taxes and barriers we should be trying to nurture, support and grow this incredibly important asset.