MANAGING DEMOGRAPHIC BONUS APPROPRIATELY

The perception of the old people about the concept of “many children a lot of substance” is no longer valid. Because in the modern era, what is important is not the quantity, but the quality. Now, many families bear greater burden because they had more than two or three children.

Population growth without being balanced with mature planning and preparedness will cause population explosion and a burden on the state. Moreover, Indonesia is the fourth most populated country in the world after China, India, and the United States.

Currently, the Indonesian population is about 253 million people. If referring to the population census in 2010, the total population of Indonesia is 237.million people. Compared to the 2000 census results, over the last decade, Indonesian population increased by around 32 million people, or an average of 3.2 million people per year with population growth rate (LPP) of approximately 1.49%.

In 2013, the number of Indonesian population is around 250 million people. With a large population and high LPP, in the coming decades, Indonesia will face an interesting and challenging population dynamics. Indonesia is predicted to experience a demographic bonus from 2020 to 2030.

Demographic bonus is a condition where the productive population (15-64 years) is greater than or approximately 70% compared to the younger population (under 15 years) and elderly (65 years and above) or unproductive population at 30%. At the peak of the demographic bonus, Indonesian demographic condition is that among 100 productive population there were 44 young and elderly population. To that end, this demographic bonus becomes one of Indonesia’s strength that should be managed maximally.

Because, if it is not prepared, it will become a threat to the country because its impact could cause social unrest ranging from increase of poverty rate and unemployment. To deal with the demographic bonus, improvement of human resource quality is a major concern. In short, the demographic bonus can be a boon for the Indonesia people, on condition that the government must prepare a high-quality younger generation, improve human resources through education and training, health, provision of jobs, and investment.

In a world Bank’s research of December this year with a subtitle “2014 development Policy Studies” stated that in the next decade, Indonesia will have some factors which, if accompanied with a good policy, can be a great driver of growth, i.e. demography with large number of workers, urbanization trends, as well as the development in China.

However, Indonesian economy is also facing the risk of slowing growth in the long term, because the growth was lately supported by favorable external environments, i.e. high commodity prices in 2003-2011 accompanied by low global interest rates since 2009.

To that end, the Indonesian economy should grow above 5% in order to avoid serious unemployment problem. In the long term, economic growth above 5% is required so that Indonesia will become a high-income country in 2030. This is because the growth is still unevenly distributed. The proof is that from 1999 to 2012 poverty rate fell from 24% to 12%. However, 65 million people are still living between the national poverty line (USD 1.25/day) and the global poverty line (USD 2/day).

It is important for Indonesia to accelerate economic growth through increase of labor productivity because it will bring more value to the workforce, reduce vulnerability to loss of jobs, and strengthen the competitiveness of the private sector. Indonesia needs to create more jobs in manufacturing and services sectors.

Not less important is the need to cover the shortage of skills of human resources so that it requires enhancement of educational quality at level all levels, as well as expansion and improvement of the quality of training centers. Graduates of educational institutions and workers should be equipped with technical skill and appropriate behavior (discipline, reliability, cooperation, and leadership).

It is done through productivity increase through structural or sectoral changes in Indonesia that requires improvement of labor function, capital, and land markets. There should also be a consistent industrial strategy which is implemented in cooperation with the private sector.

In 2020-2030, Indonesia will have about 180 million people in productive age, and unproductive age of around 60 million people, or 10 productive-age people who have 3-4 unproductive-aged people as dependents, so it will increase public and national savings.

What shall be done and prepared for the demographic bonus is improvement of educational quality for the betterment of the Indonesian nation. Based on the wealth of natural resources (SDA) and human resources, the development of national education is something very important for the sake of empowerment of Indonesia’s demographic and geographic potentials.

In developing a qualified generation, development of a competency-based curriculum should be integrated and comprehensive with the main focus on knowledge, aptitude, skills, attitude, independence and creativity, and values that are reflected in thinking and acting habits.

Besides being equipped with education and good health services, the values of Pancasila (the five basic principles) and national awareness should be instilled to create a generation with good morality and patriotic. Increasing number of productive population must be accompanied with increase of quality in order to compete in work or create jobs.

Moreover, Indonesia has entered the global free trade, including with China, and will face the ASEAN Economic Community (AEC). So that Indonesia does not lose in competition or is not a burden on the state due to demographic bonus. So, besides human resources development through quality education and health services, the next strategy is to create new business by continuously educate young entrepreneurs, provide assistance, and open markets.

Creating new business is better than creating workers so that there will be a growing number of entrepreneurs archive the ideal amount, i.e. 2% of the total population. Improvement of the quality of education to create a qualified generation and create jobs through entrepreneurship is the answer to the demographic bonus challenge.

Demographic bonus will be enjoyed by Indonesia in 2020-2030, where at that time the productive age population above 15 years and below 65 years is very large. While, the number of population aged under 15 years and above 65 years is very small. This number will certainly be very beneficial to Indonesian economy, because economic production will work more optimally, while consumption slowed.

Because the national economy is now facing economic dualism, where there is a wide disparity between sectors, especially between agricultural sector and other sectors. The large number of workers absorbed in the agricultural sector has not been able to create prosperity. While, workers in the manufacturing sector and mining services earn high income.

Not only that. Other indicators that illustrate the imbalance are the gini ratio of Indonesia which is now at level 0.41. This figure illustrates the distribution of welfare in Indonesia which experienced imbalance. In 1999, the ratio only reached 0.30, which shows that income imbalance in this country is very low.

But, since 2010, the income gap is increasing. Even 2011-2013, the gini ratio rose to 0.41. The increase of imbalance in the last 10 years cannot be ignored, because it will be a boomerang for the Indonesian economy in 2020-2030.

Through a focused, structured and systematic education, the younger generation will make Indonesia ready to compete at the regional (ASEAN) as well as global levels to prevent Middle Income Trap (MIT) or failure. In conclusion, demographic bonus must be used properly and should be understood as a condition where the government receives as blessing.

There is a number of government priority agenda, which in general, are appropriate to prevent demographic catastrophe, namely improvement of human resource quality and improvement of productivity and competitiveness of the nation. It is done through ambitious and serious mental revolution or structural reform. (E)

Business News - December 17, 2015