The financing need for providing paid maternity leave in the informal sector in Indonesia

Background The economic cost of not breastfeeding in Indonesia is estimated at US$1.5–9.4 billion annually (Walters et al, 2016; Siregar et al, 2018; Walters et al, 2019), the highest in South East Asia. Half of the 33.6 million working women of reproductive age (WRA) in Indonesia are informal employees, and less than 50% exclusive breastfeed. No 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.Method The 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. Result At 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).Conclusion The yearly cost of providing MCT for eligible WRA working in the informal sector is significantly lower than the current annual cost of not breastfeeding in Indonesia, as computed in previous work (Walters et al, 2016; Siregar et al, 2018; Walters et al, 2019). 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.