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Paid sick leave touted for pandemic relief

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Asian Development Bank (ADB)
BW FILE PHOTO

EXPANDING paid sick leave (PSL) to encourage self-isolation could be an effective strategy for containing coronavirus disease and will likely be less costly overall than lockdowns, the Asian Development Bank (ADB) said.

It said a special PSL program will support symptomatic patients while they self-isolate, with the option to pay a single rate for the entire population, or variable rates based on the regional minimum wage. Coverage can be limited to areas with higher case loads, to reduce costs.

The findings were outlined in an ADB policy brief, Paid Sick Leave as a Tool for COVID-19 Control.

“Modeling finds that a PSL program in the Philippines that encourages symptomatic workers to self-isolate could reduce the overall mortality from COVID-19 (coronavirus disease 2019) by as much as 50%,” it found.

The bank estimated that P110 billion will be needed to extend paid sick leave benefits to symptomatic COVID-19 workers at a flat rate of P480 per day.

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Employers are estimated to pay P22.2 billion through leave benefits and the rest can be subsidized by the government through the Social Security System (SSS) or Government Service Insurance System. A full subsidy can be granted for those not covered by either pension fund, it said.

The costs could fall drastically if payouts are based on regional minimum wages, and targeted at areas with higher COVID-19 incidence. The ADB estimated a total payouts of P10 billion if only high-risk areas are eligible, or P34 billion to cover both high and moderate-risk areas.

These totals are equivalent to 0.05% and 0.18% of gross domestic product (GDP), respectively.

“The costs-financial and administrative-of a special COVID-19-related PSL program are manageable, at a fraction of a percent of GDP,” it said.

The ADB study considered all types of workers, including the self-employed, and those under informal work arrangements. It estimated the administrative costs of implementing the program at P9 billion, equivalent to 0.05% of GDP.

The bank described the estimated costs of the program as “not prohibitive,” especially when targeted at areas where COVID-19 infections are higher.

“When considered relative to other COVID-19 control measures, PSL can be quite cost-effective,” it said.

The SSS already has a system for covering those not in the formal labor force, it said.

“By helping to smooth consumption shocks for those infected, PSL has an important social protection function. Given the low economic costs and multiple benefits of PSL, it should be considered a priority “no-regret” option to help keep the pandemic contained,” it added. — Beatrice M. Laforga

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