Indonesia will enjoy a demographic bonus until 2030 and is projected to enter an aging population period of starting in 2045. The demographic bonus is only useful if it is managed properly.
Data from the Central Statistics Agency’s National Economic Survey 2010 and Intercensal Population Survey 2015 show changes in the population structure. Nationally, the population pyramid in 2015 grew in the population aged 10 to 54 years, indicating a high working-age population.
On commemorating World Population Day, Tuesday (11/7), National Development Planning Minister/National Development Planning Agency (Bappenas) chairman Bambang Brodjonegoro said that if left to nature, the prosperity Indonesia enjoys as a rich country would be very short, because the population would start aging.
The demographic bonus gives a window of opportunity for a country to launch into a period of prosperity. During this period, the inactive population (aged 0-15 years and over 65 years) will be well below the economically active population. This window of opportunity generally occurs only once in a nation, when the dependency ratio is at its lowest.
In rich countries, when the dependency ratio is low, younger generations drive growth through labor productivity, consumption and formal savings.
To achieve the greatest benefits, the human resources condition must meet the needs of the job market. It is important for Indonesia to determine its economic choices. Commodities are no longer a mainstay, so what should be developed are the manufacturing and service industries by focusing on the agribusiness and marine sectors, because therein lies our strength.
In order to realize this, educational support needs to be prepared. Not only in university degrees, but also for programs that offer skills mastery through vocational education in line with the needs of the labor market, especially mastery in technology and entrepreneurship.
Indonesia wants to get out of the middle-income trap. If the economy grows an average of 5 percent per year, Bappenas projects that Indonesia will be rated a rich country in 2038. However, by 2045, the population will begin aging. The decline in national productivity can pull down national prosperity. Costs incurred by the state will rise, especially health costs, while tax revenues will fall.
There are thoughts of extending the demographic bonus by providing incentives and services for young women and families to have more children. The challenge is to build an urban infrastructure to accommodate more than half of the population and to provide employment for young people so as not to cause socio-political unrest.
