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

The economic cost of not breastfeeding in Indonesia is estimated at US$1.5 – 9.4 billion annually, the 42 highest in South East Asia. Half of the 33.6 million working women of reproductive age (WRA) in 43 Indonesia (15-49 years) are informal employees, meaning they are working as casual workers or they 44 are self-employed (small scale business) and assisted by unpaid/family worker(s). No specific 45 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 47 working in the informal sector in Indonesia. The costing methodology used is the adapted version of the World Bank methodology by Vilar- Compte et al 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 53 informally who gave birth within the last year. The population covered, potential cash transfer’s unitary 54 cost, the incremental coverage of the policy in terms of time and coverage, and the administrative 55 costs were used to estimate the cost of MCT for the informal sector.


Background 83
7 and as such can provide urgently needed evidence for policy making purposes in the context of 156 supporting recommended breastfeeding practices, especially given the relatively low health budget in 157 Indonesia (under 5% share of GDP as of 2014) [45]. This study follows on our previous research on 158 the cost to expand maternity protection for the formal sector [30] and begins to fill the gap in cost 159 estimates for informal sector maternity benefits. 160 161

Methods 162
The costing methodology used is the adapted version of the World Bank methodology by  Compte et al [31], following pre-set steps to estimate costs using nationally secondary data. The To calculate the costs in this study, the previous formula was applied through the following steps: 185  . Using this cost, the percent of our administrative cost as compared to the total 240 cost falls between 5 -36% (Table 3), depending on the UC used in the calculation. Our 241 administrative cost per woman and its share out of the total cost is higher than that of Mexico, 242 but comparable to the study conducted in the Philippines [31,59]. 243

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The administrative cost (AdmCy) was added to the total cost obtained from step 5 to yield the total 245 cost of providing cash transfers to WRA working informally. The cost per women was calculated by 246 dividing the total cost by the estimated number of women expected to receive maternity leave. The 247 details of the assumptions used for our calculations are provided in Table 1. All costs were converted 248 to USD using the 2019 reference exchange rate from Bank of Indonesia [60]. The annual cost for MCT in informal sector 260 Table 3  providing MCT for WRA working informally is much higher than the existing CT program (PKH). 280

Results 251
As previously described, the PKH program provides the lowest 20% income household group with 281 conditional cash transfers (CCT) to increase its family members' access to health and education 282 facilities, to improve the maternal and child health, and it is the closest type of existing CT program 283 in Indonesia to our proposed MCT program. The annual cost of PKH adjusted to 2018 value is 284 US$209million, covering 778,000 households in 2010 [29,58]. At 100% coverage, our MCT program 285 total cost using CT as UC (for 13 weeks leave) amounts to around US$669million and US$1.3 billion 286 (26 weeks leave). Using other UCs, except for the poverty line at 13 and 14 weeks, all total costs at 287 100% coverage are higher than PKH. At the lower coverage rate of 21% the cost is much lower 288 (US$140million for 13 weeks leave, using CT as UC), similar to the other total costs estimated by using 289 other UCs at 21% coverage. As such, a trade off occurs between increasing coverage or producing a 290 more feasible total expenditure. 291

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The PKH is an established program producing positive results (e.g. increase utilization of childbirth 293 through trained health professionals, stunting reduction) [28]. The introduction of MCT in the 294 informal sector may require significant advocacy to convince policy makers of the importance of the 295 transfer program to implement at 100% coverage for 26 weeks. Given budget constraints can be one 296 of the obstacles for implementing maternity protection policies [30,45], the initial introduction of 297 MCT for the informal sector could start at a lower cash transfer benefit level and/or coverage (i.e. 13 298 weeks and/or 21% coverage), using a more moderate UC (i.e. poverty line or 2/3 minimum wage), 299 and increase time/benefit provided, coverage, and UC gradually as implementation progresses. 300 However, further studies are also required to determine the minimum cash transfer amount needed 301 to improve health outcomes and related behaviors such as breastfeeding. As PKH has already yielded 302 positive results, the PKH cash transfer unit cost can be considered as a tentative benchmark of the 303 required minimum cash transfer amount. 304

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We also found that our total cost estimates in all scenarios did not exceed 0.5% of Indonesia nominal 306 GDP in 2018, a much lower percentage than the share of health expenditure on GDP. The cost per 307 woman, however, could be around 11 times higher than the health expenditure per capita [45] and 8 308 times higher than the cost of PKH per household [29]. Thus, although the total cost seems low in 309 comparison to the total GDP, the cost per woman may not look appealing to policy makers. This can 310 be challenging since budget availability has already been recognized as one of the issues faced in 311 optimizing the more established paid maternity leave policy for the formal sector [30]. As MCT 312 policies for informal workers currently do not exist, this challenge will require proper program and 313 financial planning as well as support from the government and relevant stakeholders since even now 314 the local government struggles with allocating its budget to support the policy for the formal sector, 315 let alone the informal sector. Additionally, even though the policies regulating maternity leave are 316 available for the formal sector, its implementation is still not optimal [62-64]. This may prove to be a 317 challenge for the informal sector to develop and implement MCT policy. If such policies are to be 318 implemented, it should ensure that women are able to access MCT without facing the risk of 319 discrimination due to the policy implementation [65,66].
One aspect that should be advocated to policy makers if MCT policies are to be optimally 322 implemented for both formal and informal sectors is that the cost of not breastfeeding is much higher 323 than the cost of implementing MCT policy. The cost of not breastfeeding in Indonesia includes the 324 irreversible costs due to sickness and cognitive loss which may be higher than US$1.5-9.4 billion 325 annually, as well as the high annual level of maternal and infant deaths which may reach more than These policies have the potential to contribute to the success of breastfeeding and as a result help 380 avoid some infant and mother deaths and improve health, social, and economic sectors. However, 381 challenges such as budget constraints and less than optimal policy implementation must be addressed 382 to devise an effective and realistic strategy for MCT implementation and enforcement based on sound 383 implementation science methods [71].