Demographic
bonus : Will it come to an end?
Santo Koesoebjono and Solita
Sarwono ;
Santo Koesoebjono is an economist and
demographer; Solita Sarwono is a psychologist, public health educator and
sociologist; Both reside in the Netherlands
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JAKARTA
POST, 11 Desember 2014
The
answer is “No”. The chance to gain a bonus/profit/dividend from the existence
of a large working-age group is determined by that group’s education.
Education
triggers higher productivity and economic growth as well as forming
high-value human capital. As the working group grows older, it will not lose
its skills obtained from a good education. People’s work experience will
strengthen their competence.
The
value of this group will therefore remain high, long after its peak of
productivity. Members of this working group will provide their offspring with
better education, yielding a generation with better potential human capital.
However,
when a large working-age population is poorly educated, the country will not
be able to enjoy the bonus of this population development. With poor
education, young people will experience difficulties entering the labor
market and competing with job seekers at national as well as global levels.
The term
demographic bonus has become popular in Indonesia recently. Politicians,
government officials and scientists have mentioned and discussed the
demographic bonus (demographic dividend) and its window of opportunity. Some
say the window of opportunity will open soon; others say that it opened
several years ago.
There
are also those who argue that the window of opportunity is coming to a close.
Discussions and debates generally focus on the start and the end period of
reaping the demographic bonus, neglecting the issue of the conditions
required for enjoying the fruit of this opportunity.
The
World Bank’s report on Indonesia (2012) shows that for this country the
window of opportunity will be in the 2010 to 2030 period. In the report, a
graph shows the rising working-age population (15-64 years) whereas the
proportion of the burden (for example, children under 15 years old and people
older than 60 years old) is relatively small.
These
relatively small youth and elderly populations are beneficial (for the large
working-age group) as the country’s capital can thus be directed to economic
development, which will result in higher productivity and stimulate economic
growth.
The
window of opportunity will be followed by an increasing demographic
burden/dependency, particularly because of the ageing population, as at the
same time, the working-age group will be on the decline.
The
demographic bonus will end there. The idea is alarming.
The
worry is justified only when the inflow of the working-age population is well
educated, highly skilled and can increase the country’s productivity and
economic growth. But if the potential work force is poorly educated and not
qualified, the country will forgo the chance of reaping a demographic bonus.
Education
is essential for many reasons. It causes fertility to decline and produces a
well-qualified workforce that stimulates higher productivity.
Education
generates fertility decline through the postponement of marriage, limiting
the number of children and birth spacing. People are aware of the need to
have healthy and well-educated children and of the high cost of raising
children.
Parents
work hard to give their children a good education. The impact of good
education is long lasting and will be strengthened by work experience.
The
effects of education are continuous. After passing the demographic-dividend
period, people’s knowledge and skills will still be used and be of value
rather than vanish.
Future
generations will be better educated, ensuring continued high productivity and
technological development.
An
example of the result of continuous education was shown at the recent
Hannover Exhibition in Germany. It displayed new technologies and innovations
as products of highly skilled human capital that will sustain economic growth
in an aged society.
Many
elderly people in Europe continue to be active and productive, sharing
experiences with the younger generation and transferring knowledge to them,
stimulating the development of technology and economic growth.
Even if
a country is endowed with a highly qualified working population, its
government should be able to provide employment.
Otherwise,
the country will see a large unemployed well-trained workforce that in turn
could create social unrest and an exodus of skilled people.
The
country will then become an exporter of its skilled people, resulting in a
big loss for the country as it has invested a lot in the people’s education.
A
well-educated working population is able to continue to support economic
growth in a country in spite of the aging population. It is common knowledge
that in developing countries the pension system is still weak and deficient.
Most
people have to continue working after they have completed their “formal” or
“official” job/service. After retirement, are those senior citizens suddenly
worthless and is their education and experience no longer of any value?
Demographic
data and analysis show that although the demographic- dividend period will
pass, the demographic dividend will remain beyond the window of opportunity
as a result of good education.
Even if the “official bell” for the start of the demographic-dividend
period has not yet rung, governments should start providing good and
up-to-date education to enable the potential working population to be
equipped with new knowledge and technologies. ●
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