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Indonesia's demographic dividend reaches peak in 2021

Jakarta Globe - January 22, 2021

Jakarta – Indonesia would reach the peak of its demographic dividend this year as the working-age population now account for close to 71 percent of the country's total population, and its birth rate continues to decline, according to the latest census data published on Thursday.

The Central Statistics Agency (BPS) announced its 2020 Population Census's interim result on Thursday, tallying Indonesia's total population at 270.2 million, 14 percent higher than its population in 2010 of 237 million people. The data suggested that Indonesia's population was growing at a pace of 1.25 percent per year in the past decade, slowing from the 1.49 percent pace a decade earlier.

The number of people between 15 and 64 years old, the working-age group, was 191 million, or 70.7 percent of its total population in 2020. In comparison, the working-age population accounted for only 53 percent of the total in 1971 and around two-thirds of the total in 2010.

Still, with a declining birth rate, the working-age population is unlikely to get bigger in the next decade.

"The window for a demographic bonus was opened in 2012 and will be closed in 2036, with the peak happened in 2021," BPS Head Suhariyanto said on Thursday. "Young age group continues to decrease, due to a decrease in the number of births," he said.

The 2020 Census data showed the population between 0 to 14 years old has dropped to 63 million from 69 million over the past decade. On the other hand, the number of people above 65 years old rose to 16 million from 12 million over the same period.

Sonny Harry B. Harmadi, the chairman of the Indonesian Population Coalition, a think-tank group that supports government population programs, said the Covid-19 pandemic presented a real challenge for Indonesia to benefit from the demographic dividend, as many people lose their jobs.

"The demographic bonus is a potential that must be transformed into an economic and health bonus. This transformation can only happen if the population in productive age really do something productive," Sonny told the Globe's sister publication Suara Pembaruan.

Yusuf Rendy Manilet, a researcher at think-tank institution Center of Reform on Economics (Core), warned that the demographic bonus would turn into a demographic burden over the next two decades should the country fail to reach a sustainable income level before its population growing old.

"Indonesia still needs high economic growth to support the changing economic structure," Yusuf said.

Many economists have suggested Indonesia must grow at least 7 percent a year to reap its demographic dividend. The $1-trillion economy was growing at a pace of around 5 percent a year before the pandemic. This year, the government expected the economy to expand by 4.5 to 5 percent, after shrinking by an estimated 1.1 percent last year.

"This demographic bonus can be very good or bad, depending on the government policies. In addition to improving the country's talents, government policy in job creation will also be essential in supporting these demographic changes," Yusuf said.

Source: https://jakartaglobe.id/business/indonesias-demographic-dividend-reaches-peak-in-202