The Aging Workforce in Indonesia and Its Impact on Economic and Social Development

Abstract

Indonesia is an emerging economy that has undergone structural change and achieved sustained growth rates that have lifted average living standards over the past three decades. Compared to advanced economies, the Indonesian population and workforce are relatively young. However, the population will age over the coming decades, and the profile will resemble that of advanced economies. Poverty and inequality are extensive, and the challenge of an aging population is that only a minority of the workforce has access to a secure post-retirement income and services that support quality aging. The challenges of an aging population and workforce are discussed in the chapter. These include the large share of workers in the informal sector and the growth of contingent work arrangements in the formal sector. Many continue to work into old age as they cannot afford to retire. Despite an increase in schooling and post-secondary education participation, the quality of education and the low investment in training has limited productivity growth.