The Indonesian workforce is aging, with dire consequences for future business profitability and productivity.
It is projected that in the next five to ten years the effects of the aging of the population will lead to a shortfall in the amount of productive labour available, says Lilis Halim, a Management Consultant for PT. Watson Wyatt Indonesia, basing her view on a survey done of about 200 Indonesian companies, with the results being compared to studies done in eleven other countries, including Australia, China, India and Malaysia.
Lilis says that life expectancy in Indonesia, at 68 years on average in 2000, had risen to 75 years in 2005. The proportion of the population aged over 50 years had reached 16% in 2005 with this share expected to rise to 28% by 2030 and a near-crippling 37% by 2050. In terms of raw numbers this would see the current 38 million persons aged 50 and above rise to 123 million in 2050.
One of the effects of this aging, she says, apart from the possible shortfall in labour, is that businesses in Indonesia will increasingly be burdened with higher health and pension costs, assuming that they abide by the less than clear rules set out in the Labour Law of 2003, which presently most companies do not.