BPJS KESEHATAN AND SME RESILIENCE: EXAMINING ITS IMPACT ON LABOR BURDEN AND PRODUCTIVITY IN EMERGING ECONOMIES

Abstract

Background and Objective: Small and Medium Enterprises (SMEs) are central to economic development in emerging economies, yet they face persistent vulnerabilities related to labor costs and workforce instability. The implementation of BPJS Kesehatan, Indonesia’s national health insurance program, offers an opportunity to address these challenges. However, its firm-level implications particularly regarding labor cost burden, employee well-being, and SME productivity—remain insufficiently understood.

Methods: Using a quantitative cross-sectional design, data were collected from 182 SMEs in West Java, Indonesia. Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to test direct and mediation effects. Constructs were measured using validated five-point Likert-scale instruments adapted from prior literature.

Results: BPJS Kesehatan participation significantly reduces labor cost burden (β = −0.46, p < 0.001) and positively influences employee well-being (β = 0.53, p < 0.001). Labor cost burden negatively affects SME productivity (β = −0.38, p < 0.001), while employee well-being exerts a strong positive effect (β = 0.49, p < 0.001). Employee well-being is confirmed as a partial mediator in the BPJS– productivity relationship (VAF = 42.3%). Conclusions: BPJS Kesehatan functions as both a cost-efficiency instrument and a human capital investment mechanism. By reducing financial uncertainty and enhancing worker well-being, public health insurance significantly improves SME resilience and productivity. These findings carry important implications for health policy, labor economics, and SME management in emerging economies.