POPULATION AND SOCIAL POLICY IN DISRUPTED WORLD - ICSC 2018
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POPULATION AND SOCIAL POLICY IN
DISRUPTED WORLD
Minister of National Development Planning/
Head of National Development Planning Agency
Presented on the International Conference: “Population and Social Policy in a
Disrupted World”
Yogyakarta, August 6th 2018
Istanbul, 31 July 2018
REPUBLIK
INDONESIA
Outline
1 Economic Performance
2 Demographic Landscape and Quality of Human Capital
3 Technological Disruption
4 The Future We Want
2
Economic Performance
REPUBLIK
INDONESIA
High and Stable Economic Growth
Largest
16th 4th Most populous
Indonesia is a big market, economy in
the world…
country in the
world
which is prospective for
investment Top 5 Emerging markets
with the best
±5% Private
consumption
middle class grows steadily
potential
Indonesia’s economic growth is Indonesian Economic
Growth (%)
GDP per capita (USD)
3877
relatively high and stable with 5,1
3374
3605
5,0 5,0
improving GDP per capita 4,9
2014 2015 2016 2017 2015 2016 2017
Source: BPS
Infrastructure Global Indonesia is projected to be the
Competitiveness Index 4th largest Economy in the World in
2050 (World in 2050, PWC)
increases from 60th to 52nd
4
REPUBLIK
INDONESIA
Economic Risks and Challenges
Monetary Normalization of Advanced Countries
Protectionism
The Slowing Down of China’s Economic Growth
Geopolitical Risks
SHORT-TERM
RISKS Decline in World Trade and Commodity Prices
Low Global Productivity
MEDIUM-TERM RISK AND CHALLENGES
DIGITAL TECHNOLOGY AGEING POPULATION
REVOLUTION 4.0
CLIMATE CHNGE
INDUSTRIAL
5
REPUBLIK
INDONESIA
Reform to Boost Economic Growth
Reforms in 2015-2017
✓ Improving Investment and
Business Climate
✓ Fiscal Reforms
✓ Infrastructure Development
✓ Development of Priority Sectors:
Industry and Tourism
✓ Technology and Innovation
6
Demographic Landscape and Quality of Human
Capital
REPUBLIK
INDONESIA
Population Structural Change from 1971-2015
• Population structural changes in the past forty years has made Indonesia becomes the largest productive-age population
country in South East Asia.
• Population is concentrated in the urban areas.
• Life expectancy is much longer
1971 2015
70-74 80-84
70-74
60-64
60-64
50-54
50-54
40-44 40-44
30-34 30-34
20-14 20-24
10-14
10-14
(in thousands) 0-4
0-4 15,000 10,000 5,000 0 5,000 10,000 15,000
15,000 10,000 5,000 0 5,000 10,000 15,000 In thousand people
Male Female Working School Lainnya
Female Male
Population 119,2 million Population 255,1 million
Life expectancy 55,1 years Life expectancy 70,8 years
Urban population percentage 14,6% Urban population percentage 53,1%
Sumber: BPS, Sensus dan Supas
8
REPUBLIK
INDONESIA
Total Fertility Rates Vary by Provinces
Decline of Fertility Rate 1971-2015 Fertility Rate by Province, 1971 & 2015
6 8
7.20 7.20
5.61 7 6.45
6.89
6.66 6.72
6.53
6.83 6.79
5 5.20 5.96
6.27 6.18
5.94
6.36 6.39 6.27 6.33 6.34
5.96
6 5.61 5.71
4.68 5.41 5.43 5.33 5.18
5 4.72 4.76
4 4.06
4
3.33
3 2.82 2.67
2.80 2.34 2.26 2.41 3 2.632.61 2.60 2.602.59 2.57 2.56 2.55 2.49 2.47
2.39 2.34 2.28 2.28 2.252.23 2.232.232.22
2.21 2.21 2.20 2.16 2.13 2.12 2.09 2.09 2.06
1.92 1.89 1.79
1.74
2
2 2.28 1
1 0
Maluku Utara
Banten
Sumatera Barat
Bengkulu
Sulawesi Tenggara
Sulawesi Tengah
Jawa Timur
Lampung
Maluku
Nusa Tenggara Timur
Jawa Tengah
Sulawesi Barat
Kalimantan Selatan
Gorontalo
Aceh
Sumatera Selatan
Bangka Belitung
Papua
Papua Barat
Riau
Kalimantan Barat
DKI Jakarta
Sumatera Utara
Jambi
DI Yogyakarta
Sulawesi Selatan
Bali
Jawa Barat
INDONESIA
Kalimantan Timur
Sulawesi Utara
Nusa Tenggara Barat
Kepulauan Riau
Kalimantan Tengah
0
SP2000
SP'10
SP'71
SP'80
SP'90
SUPAS'76
SUPAS'85
SUPAS'95
SUPAS'05
SUPAS'15
1971 2015
• Keluarga Berencana (KB) in Indonesia is acclaimed as the best family planning program in the world.
• KB managed to reduce nearly half of fertility rate in a relatively short period.
• Some provinces, however, still have high TFR in 2015.
• Large differences in TFR divided the provinces into four types of demographic transition: late, early, pre-transition, and uncertain.
Source: SP and Supas, various periods, BPS
9
Uneven Population Distribution and
REPUBLIK
INDONESIA Demographic Transition
Late transition
Below replacement rate TFR,
large share of older population,
55,2 MIO
window of opportunity has 15,3 MIO
114,8 PEOPLE/KM2
passed 28,2 PEOPLE/KM2 18,7 MIO
99,2 PEOPLE/KM2
Early transition
Increasing share of children and
working population, older
people start to increase
Pre-transition
stagnant declining fertility, later
period of window opportunity 6,9 MIO
149 MIO 13,8 PEOPLE/KM2
9,9 MIO
1,103 PEOPLE/KM2
147 PEOPLE/KM2
Uncertainty to reach the
window of opportunity
High fertility, high mortality, low
access to education and health,
Sources: 1. Adioetomo, Forthcoming IRSA Book Series on Regional Development No. 15, 2017; 2. Central Statistical Bureau, Supas 2015
10REPUBLIK
Urban Agglomeration as an Engine of Economic Growth
INDONESIA
Contribution of Metropolitan Areas to GDP in 2015 All metropolitan areas have
contributed more than one
third of National GDP in
Jabodetabek 19.15% 2015
DKI Jakarta 16.20%
Almost half of the urban
Gerbangkertosusilo 6.55% contribution to the National
GDP comes only from DKI
Bandung Raya 3.08% Jakarta
Mebidangro 2.24%
More than 90% of the richest
Kedungsepur 2.18% Indonesians reside in
Jabodetabek, controlling more
Mamminasata 1.21%
than 50% of financial wealth
Sarbagita 0.67%
Source: Boston Consulting Group (2017)
11REPUBLIK
INDONESIA
Population as Central of Development
GAP IN DEVELOPMENT
CHALLENGES TARGETS
• Large disparity in Total Fertility
Rates: High vs Below Replacement
• Poverty Sustained
Rate
HIGHER Economic
• High Mother and Infant Mortality • Regional disparity and
inequality PRODUCTIVITY Growth
Rates OF LABOR
• Low coverage of Social Security • Youth Unemployment MARKET
Program
• Low Human Development
• Uneven and disparity in quality of Index Escape from
education Middle Income
• Population distribution Trap
Human Capital Development Is The Key To Harness The Demographic Dividend
12REPUBLIK
INDONESIA
Indonesia Human Capital Endowment
Gini Coefficient
HDI : 70,79 (2017) Number of Potential
Millenial Generation
medium human development
0,389 (March, 2018) 90 Million(2018)
Poverty Rates (%) Total Fertility Rate
9,82 (March, 2018) 2,28 (Supas’15)
Unemployment Rate Infant Mortality Rate
5,50(Agust’17) 24 (SDKI’17)
GDP/Capita Years of Education
$ 3,605 (2016) 12,72 (2016)
Economic Growth: 5,07% (2017)
13REPUBLIK
INDONESIA
Competitiveness is Still Low
HDI Scores and Ranks, 2016 Gross Enrollment Rate (%)
100 88
86 82
79
59 80
60 53
79 The most influential factor of 40 30 31
36
High HDI lower HDI: 20
87 • education quality 0
• health condition as reflected Thailand Malaysia Indonesia Philipina
74 by shorter life expectancy
SMA > SMA
Literacy Rate (%)
113 100
99
99.1
99
98.9
98.5
99
69 98 98
Indonesia can compete with 98
98.2
countries in terms of: 98
Medium
97
97
• Literacy rate 97
116 • Enrollment rate 96
96
68 Thailand Malaysia
Perempuan
Indonesia Philipina
Laki-Laki
Sumber: UN Human Development Index
14REPUBLIK
INDONESIA
Quality and Relevance of Education Needs Reform
Gross Enrollment Rate Access to education increases Accrediattion status of Education
(2010 – 2016) Institutions (2016)
• Access to education increases in all
47,5% levels.
36,5% Elementary School Junior High School
Pre-School
Accrediation needs to be improved
111% • The education policy needs to
109% promote institutional accreditation for
Elementary primary and secondary education.
90,1%
• Accreditation for higher education
institutions remains a challenge. Senior High School University Degree
80,6%
Junior High
80,9%
Relevance of education needs to be
62,9% strengthened
Senior High • Investment on education will be more
31,6% optimal by equipping labour with
26,3% right skills. A Acreditation B Acreditation Not acreditated
Higher Education
Source: Susenas (2016) and Forlap, Dikti (2016) Source: Dapodik and Emis (2016)
15Work Ethic and Innovation is still lower compared to
REPUBLIK
INDONESIA neighbouring countries
Global Innovation Index 2017 Ranks and Scores
1 Switzerland 67.69
Integrity 7 Singapore 58.69
37 Malaysia 42.72
Indonesia
Work Ethic 87 30.10
Hardworking, Source: GII Report, 2017
optimistic, Growth of Labour Productivity (percent)
“National Movement productive, 12.00
on Mental Revolution” innovative, 10.00
competitive 8.00
6.00
4.00
2.00
-
Mutual 2009 2010 2011 2012 2013
(2.00)
Cooperation (4.00)
Total Industri Pengolahan
Processing Industries Industri Pengolahan
Middle and Besar-Menengah
Large Processing Industriies
Source: ILO, 2015
16Global Human Capital Index
REPUBLIK
INDONESIA Left Behind Neighbouring Countries
The weakest components are know-how and labour deployment.
Average Scores 62,19 Ranks 65 of 130 countries
Malaysia (ranks 33), Thailand (ranks 40), dan Vietnam (ranks 64)
Know-how is still low (Score 50,2 → Rank 80).
Human development is not optimal yet (Score 67,2 → Rank 53).
Capacity is still low (Score 69,7 → Rank 64).
Labour deployment is limited (Score 61,6 → Rank 82).
WEF Global Human Capital Index (2017 )
17REPUBLIK
INDONESIA
Higher Number of Youth is Under Employed
Half Unemployed Workers by Age Group, 2007-2017 Unemployment Rates by Age Group, 2010 and 2014-2017
20 25% 35%
31.12%
Million People
18 30.31%
30% 27.97% 28.09% 27.54%
16 20%
Proportion to total workers
14 25%
12 15% 18.97%
20% 17.44% 17.46% 16.62%
11.25% 15.80%
10
15%
8 10%
6.38% 9.04% 8.15%
6 10% 7.27% 7.08% 6.76%
5.9
4 5% 5%
2
3.3
0%
0 0%
2010 2014 2015 2016 2017
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
15-29 30+ 15-29 30+ 15-19 20-24 25-29
• Declining over time, there was about 11 Million of youth (15-29) half unemployed.
• Youth population tend to be less productive. Youth Unemployment Rate is away above the national rates.
• The older the youth, the higher possibility of them to be unemployed. And there is indication they are lack of technology
capability
Sumber: Sakernas periode Agustus
18Technology Disruption
REPUBLIK
INDONESIA
The Rise of Digital Economy
Q3-2017
GDP Structure (%) Economic Growth (%) • Information and
19.93 Manufacturing 4.84
Communication sector
13.96 Agriculture 2.92
12.98 Trade 5.50 grows more than 9% and
10.26 Construction 7.13
continues its high growth
7.15 Mining 1.76
5.57 Transportation and Warehousing 8.27 around 9% in the last 2
4.22 Finance and Insurance Services 6.44
years.
3.74 Information and Communication 9.35
3.60 Government Administration 0.43 • The rise of e-commerce
3.19 Education Service 3.70
2.76 Accomodation and Food Service 4.96 start-ups like Go-Jek,
2.72 Real Estate 3.64
Grab and Uber stimulate
1.74 Other Services 9.45
1.73 Business Activities 9.24 the Transportation and
1.20 Electricity and Gas 4.88
Warehousing to grow
1.04 Health and Sosial Services 7.44
0.07 Water Supply 4.83 higher than 8%.
20REPUBLIK
INDONESIA
Indonesia’s Digital Opportunity
Internet Penetration Rate Internet Penetration Rate is highly correlated
with income per capita
2013 2015 2020
65%
38 88 145
millions millions millions 5.8%
Indonesian in average used 3,5 hours on the internet everyday
(double than Americans)
2.5%
51% 71% 67%
Source: We Are Social Indonesia, 2017 Source: Asosiasi Penyelenggara Jasa Internet Indonesia, 2016
21REPUBLIK
INDONESIA
Digital Economy Landscape in Indonesia
FINANCIAL TECHNOLOGY (FINTECH) ON DEMAND SERVICES
Transaction forecast Transaction value per High market share in Indonesia
in Indonesia 2016 capita 2014
132,7 million 63,4 million
US$ 14,5 billion US$ 56,98 Internet users Smartphone users
(Rp 190 trillion) (Rp 747.000)
Players DIGITAL ECONOMY Players
LANDSCAPE
Digital growth in Indonesia until today makes
economy digital in Indonesia potential; up to
US$130 billion in 2020
E-COMMERCE INTERNET OF THINGS (IOT)
Transaction potentials in Indonesia Market potential in Asia Pacific
2013 2016 2020 2020
8
US$ billion US$ 20 billion US$ 130 billion 2015 US$ 583 billion
(Rp 104 trillion) (Rp 261 trillion) (Rp 1.700 trillion) US$ 250 billion
E-commerce is one of the
Players Players
most important parts of
Digital Economy Landscape in
Indonesia
Source: IDEA, 2017
22REPUBLIK
INDONESIA
E-Commerce Actor Landscape in Indonesia
E-commerce actors
23REPUBLIK
INDONESIA
E-Commerce Ecosystem in Indonesia
ICT Infrastructure – Payment/Banking System– Logistics as
inseparable parts of e-commerce ecosystem
24REPUBLIK
INDONESIA
Digital Technology and Labor Market
Digital Technology can be Potentially Disruptive
Study by McKinsey (2016) indicated :
52.6
MILLION
Jobs that will
potentially be replaced
in Indonesia
60%
Occupations in
the world will use
automatization
30%
Occupations in the
world will be replaced
by high-tech machine
Digital Technology Stimulate Economic Productivity
Same study indicated :
3.7 New jobs due to the rise
of digital economy the
MILLION next 7 years in Indonesia
$6 Totall revenue of
e-commerce in
BILLION Indonesia (2016)
78%
Current internet
users made
online purchases
Indonesia’s e-commerce estimated to grow by 18% annualy in the next 5 year and contributed
to an additional USD 35 billion of GDP
25THE FUTURE WE WANT
REPUBLIK
INDONESIA
Indonesia 2045
INDONESIA
2045
Indonesian citizen who excel, Inclusive and equal
cultured, and are advanced of development
science and technology
Independent, Developed, Fair, and Prosperous Nation
Advanced and Strong democratic
sustainable economy country
27REPUBLIK
Our Population is Projected to be around 318,9 Million in 2045
INDONESIA
2015 2045* 2045
Projection 2030 2045
80-84
255.1 million 318.9 million 70-74
Total Population
60-64 Labor Force 177.9 206.4
50-54 (15+ years) million million
2.28 2.1
Total Fertility Rate 40-44
30-34 Labor Force
70.8 years 75.5 years 20-24
Participation 77% 80%
Life Expectancy Rate
10-14
Thousand people
0-4
65.76% 80% 170.4 199.2
Labor Participation 15,000 5,000 5,000 15,000 Workers
Male
Laki-laki Female
Perempuan Bekerja Schooling
Sedang Sekolah Other
Lainnya
million million
Working
49.2% 53.5%
Dependency Ratio
• Indonesia will experience a substantial population growth- an increase of 63.4 million or 24.7
53,1% Urban Population 67,1%
percent in 2045. About 67.1 percent of population will live in urban areas.
• Numbers of working age population will continue to increase, but the share of younger groups
(aged 15-29) will decline..
Source: *Indonesia Population Projection Revision
2015-2045 (latest estimates) • The labor force is projected to grow over the next 30 years at an annual rate of 1.84 percent . By
2045, the labor force is projected to reach 206 million.
28More Technology-adapted Workers are Needed to Harness
REPUBLIK
INDONESIA Demographic Dividend
First Demographic Dividend 0.5
First Demographic Dividend (%)
62 60
Number of effective workers per 100 population
58 0.4
Contribution to Economic Growth (%)
Dependency Ratio (%)
61
56
0.3
60 54 End of First
52 0.2 Demographic
59 Economic
Dividend
Support 50
Ratio 0.1
58
48
46 0
57 Dependency Ratio
2015
2027
2037
2039
2049
2017
2019
2021
2023
2025
2029
2031
2033
2035
2041
2043
2045
2047
2051
2053
44 -0.1
56
42
-0.2
55 40
2017
2025
2047
2055
2069
2015
2019
2021
2023
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2049
2051
2053
2057
2059
2061
2063
2065
2067
Dependency Ratio (%) Economic Support Ratio
• Peak of First demographic dividend is in 2030s
with benefits as follows:
• We have 60 effective workers to support 100
Note : population.
▪ First Demographic Dividend is counted as annual growth of Economic
• Contribute approximately 0,21 pp average per
Support Ratio, which is number of effective workers support for every
100 population (consumers) (Mason, Lee, 2015) year to economic growth
▪ Economic Support Ratio provide more subtle description on number of • The period can be lengthen by increasing number of
effective workers that can support development. more productive workers
29Technology Towards More Equal Population Distribution:
REPUBLIK
INDONESIA More Mobile, Less Migratory
• High population growth rate causes small and medium-size cities to grow and form mega urban.
But technology advancement can prevent massive migration.
• Need strategic policies to provide more incentives for people to fill the gap among the
region (western vs eastern Indonesia)
Who Can Move Key Drivers
• Young and productive workers who will • Economic centers development in the eastern
work in the areas of new economic centers: part
– Maritime, industrial and manufacturing • Massive infrastructure development
– Services (trades, tourism, education) • High quality public facilities
– Public services
• Transportation and technology development
– Mining
– Agriculture and forestry
• Basic services
• Older people to live in more comfortable
environment (eq. NTB)
Technological advancement can make the people feel like home: more mobile and less
migratory in the future
30REPUBLIK
INDONESIA
Labor Reform to Adapt with Technology
• Increasing labour productivity to accelerate 2015
2015 2045
economic development
Labor Force Participation Rate
66% >80%
• Change of economic structure is followed by
more supportive labour structure
Female Labor Force Participation Rate 49% 73%
Informal Workers Proportion 58% 15%
• Unemployment is kept to natural
unemployment rate (3-4 percent)
Agriculture Sector Workers Proportion 33% 11%
Labour with High Education 38% 90%
01 02 03
2016 - 2025 2026 - 2035 2036 - 2045
• Reform towards flexible • Institutional strengthening and • Establishment of training and
Labour Reform Stages labour market. expansion of access to certification systems across
competency-based education all sectors.
• Improving the quality of and training.
education and vocational • Increasing relevance of skills, • The expansion of SJSN
training of workers matched especially in the field of coverage.
with the needs. engineering and information
technology.
31REPUBLIK
INDONESIA
Digitalization to Increase GDP & Create More Jobs
Estimated benefits of the implementation of Industry 4.0
Contribution of GDP from
GDP Growth Job creation
manufacturing
+1-2% p.a. >10 million >25% the contribution
additional employment
an increase in GDP growth from current conditions by of manufacturing to GDP
from baseline 2018-2030 2030 in 2030
• manufacturing contribution to • Increased employment from +20 • Increase in manufacturing
GDP in 2030 Growth of real GDP million to> 30 million jobs by 2030 contribution to GDP from ~ 16%
growth from 5% 2 to 6-7% YoY to ~ 25% by 2030
between 2018-2030
Source: Making Indonesia 4.0, Ministry of Industry, World Bank, Badan Pusat Statistik, A.T. Kearney
32REPUBLIK
INDONESIA
Social Policies and Technology Disruption
Vulnerable Groups Labour Force Population
Assistance towards
poor and non-poor Certifying Youth and Ageing
segments of workers population
population
• Integrated social protection • Technological based ceritification • Improving skills and more
system, including social system productive technological
assistance and social security. adoption to improve youth and
• Setting standard and qualification elderly productivity.
• Transformation of social policy
of the occupation by sectors.
instruments into electronic • Technological based health
financial transfers. • Certification for skilled (and monitoring system for ageing
vocational) workers. society.
•
33Concluding:
REPUBLIK
INDONESIA Take the Most Benefit of Technological Changes
• Technology disruption is an opportunity to harness demographic dividend more
effectively by improving productivity and return for investment.
• Use technology to improve implementation of social policies.
• Use technology to improve skills, health, and other human capital investment
• Creating new jobs by promoting technology-based entrepreneurship.
• Improving the workers’ education and skills to adjust with technology changes.
✓ New automation-supporting skills.
✓ Human-specific skills (soft skills, logical thinking, coaching, problem solving, creativity, etc.).
• Increasing investment by:
✓Developing products of saving, time deposit, stocks, and other long-term investment;
✓Increasing efficiency and simplifying investment procedure;
✓Developing instruments for financing development; and (and not limited to)
✓Sustainable pension system.
34REPUBLIK
INDONESIA
THANK YOU
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