The annual cost of providing paid maternity leave in the informal sector in Indonesia 

Abstract

BackgroundThe economic cost of not breastfeeding in Indonesia is estimated at US$1.5–9.4 billion annually, the highest in South East Asia. Half of the 33.6 million working women of reproductive age (WRA) in Indonesia (15-49 years) are informal employees, meaning they are working as casual workers or they are self-employed (small scale business) and assisted by unpaid/family worker(s). No specific maternity protection entitlements are currently available for WRA working informally in Indonesia. This study aims to estimate the cost of providing maternity leave cash transfer (MCT) for WRA working in the informal sector in Indonesia.MethodThe costing methodology used is the adapted version of the World Bank methodology by Vilar-Compte et al (2019), following pre-set steps to estimate costs using national secondary data. We used the 2018 Indonesian National Socio-Economic Survey to estimate the number of women working informally who gave birth within the last year. The population covered, potential cash transfer’s unitary cost, the incremental coverage of the policy in terms of time and coverage, and the administrative costs were used to estimate the cost of MCT for the informal sector. ResultAt 100% coverage for 13 weeks of leave, the annual cost of MCT ranged from US$175million (US$152/woman) to US$669million (US$583/woman). The share of the annual costs did not exceed 0.5% of Indonesian Gross Domestic Product (GDP).ConclusionThe yearly cost of providing MCT for eligible WRA working in the informal sector is economically attractive as it amounts to less than 0.5% of GDP nominal of Indonesia. While such a program would be perceived as a marked increase from current public health spending at the onset, such an investment could substantially contribute to the success of breastfeeding and substantial corresponding public health savings given that more than half of working Indonesian WRA are employed in the informal sector. Such policies should be further explored while taking into consideration realistic budget constraints and implementation capacity.