Harnessing the Demographic Dividend

With a population exceeding 270 million, Indonesia represents the fourth most populous country in the world. Approximately 70 percent of the population is between the ages of 15 and 64, indicating that a significant proportion of the population is of working age. Due to the country’s youthful population, the Indonesian state is able to allocate a smaller proportion of its budget to healthcare and the pension system than would be the case in an aging society. The majority of the population is of working age, while the minority requiring social assistance is relatively small, resulting in a low dependency ratio. A sizable and productive labor force is a crucial prerequisite for sustained, accelerated growth, particularly in light of the relatively low cost of labor in Indonesia compared to other countries. It is also crucial to consider the broader context of the growing, young, and large population, as a young population also generates substantial demand for goods and services. Moreover, the structure of demand differs significantly depending on the age bracket in which the majority of people are situated within a given society. Rapid growth, increased investments, and heightened demand are often referred to as the demographic dividend or demographic bonus. Sari categorizes these trends as follows: