Millennials Key to Indonesia’s \'Golden Age\'

KOMPAS/AYU PRATIWI

PPM Manajemen held the 2018 Human Capital National Conference on "How Millennials are Reshaping Corporate Culture" on September 5-6 2018 in Jakarta.

JAKARTA, KOMPAS – Indonesia currently has a working age population (15 to 64) of 181 million, nearly six times the Malaysian population. This figure could grow to 208 million by the time the country marks its centennial in 2045. This will be a great development capital for transforming Indonesia into a wealthy nation.

The benefits of a large working age population is outlined in PricewaterhouseCooper’s (PwC) February 2017 report, “The World in 2050”, which stated that Indonesia would become the world’s biggest economy by 2050. This large working age population is the country’s demographic bonus, which is expected to last until 2036. “We should make preparations as early as possible so that this demographic bonus does not turn into a deficit,” Statistics Indonesia (BPS) head Kecuk Suhariyanto said in Jakarta on Wednesday (26/9/2018), during a seminar commemorating National Statistics Day (HSN).

The event also marked National Statistics Day through the 2018 BPS Awards. In the media category, the Kompas daily was awarded for consistently providing sharp analysis of statistical data in relation to objective conditions on the ground. Deputy managing editor Tri Agung Kristanto received the award on behalf of Kompas.

Millennials born between 1980 and 2000 comprise half of the working age population. They belong to a unique generation, born and raised amid changes in the political and socioeconomic landscape as well as during the advent of the internet. “Managing millennials is sometimes easy, sometimes hard,” said Bhima Yudhistira Adhinegara, a researcher at the Institute for Development of Economics and Finance (Indef).

The millennials’ intimate knowledge of digital devices, the internet and social media may trigger an eruption in the digital economy. Despite inheriting manufacturing and agricultural production businesses from their parents, millennials are far more interested in start-ups, financial technology (fintech) and property, a situation that threatens the future sustainability of manufacturing and agricultural industries.

In the past 15 years, labor absorption has been declining in the agricultural sectors and fluctuating in industry. However, the figure is skyrocketing in trade, restaurant and hospitality services. “Millennials are interested in [the service industry], as it is seen as having a better career and income trajectory,” said Bhima.

The situation has led to a decline in industrial growth and widespread growth in e-commerce. Nevertheless, a majority of the e-commerce products are imported. The production of domestic goods must be boosted to alleviate the trade deficit.

The economic behavior of millennials, who prioritize experience over ownership, has contributed to this surge in the service industry. Researches in many advanced countries show that millennials rarely visit a bank in person, prefer ride-hailing services than buying cars, love to travel and prefer lounging in cafés to shopping.

Separately, Youth Laboratory Indonesia executive director Muhammad Faisal said that studies on the economic behavior of millennials abroad did not reflect the economic behavior of Indonesian millennials, who are driven more by changes in the transportation infrastructure and socioeconomic conditions. “Infrastructure development has encouraged youths to develop their hometowns,” he said. This was evident in the cafés, tourism villages and modern agricultural management initiatives that had mushroomed in many regions.

In advanced countries, gadget use led to individualism that increased stress; in Indonesia, gadgets appealed to youths and increased contentment.

Professional challenges

Millennials are facing new professional challenges. The widespread use of machines and automatization has replaced a number of traditional jobs in Industry 4.0.

A 2016 study the International Labor Organization (ILO) conducted on ASEAN countries found that more than 60 percent of jobs in the electronics, automotive, textile and fashion industries were threatened by automatization. “Despite the potential loss of many jobs, more new jobs created will be created,” said Bhima.

These new jobs are generally tied to information technology, such as data analysis, artificial intelligence, cybersecurity and the digital economy.

In order to preapare for Industry 4.0, radical change was needed in the vocational education system at high schools and universities. “Like in South Korea, education must be adjusted to industry needs. It must not be just about completing compulsory education,” said BPS social statistics deputy head Margo Yuwono.

However, Faisal warned that Indonesia’s vast archipelagic territory would make it difficult to apply such radical changes to the national education system all at once. Urban youths were seen as better prepared to accept the changing challenges in professional sectors.

Apart from supporting modernity, there is also a growing awareness among Indonesian millennials to protect and preserve local traditions. Unique skills with economic values, such as producing handmade batik, must be developed.

(MZW)