Dewi H. Susilastuti, Ph.D.

Demographic environment

What is demography?Demography is a broad social science

discipline concerned with the study of human populations.

Demographers deal with the collection, presentation and analysis of data relating to the basic life-cycle events and experiences of people: birth, marriage, divorce, household and family formation, employment, ageing, migration and death

IndonesiaWith a total population of 248,216,193 (July

2011 est.), Indonesia is the fourth most populous country in the world after China, India, and the USA. During 2006-2011, the Indonesian population grew by 5.9%

Emerging middle income country

Just a few years ago, a major bank predicted that Indonesians would, on average, earn US$3,000 per capita by 2020. At the beginning of 2011, Indonesia hit that mark, beating the prediction by nearly a decade.

Underpinning the rise in consumer expenditure is the rise of the middle class. In 2006, there were 6.6 million households with an annual disposable income of over US$10,000 (in constant terms), but by 2011 this number had risen to 13.7 million households.

Middle classThe middle rests between the top and the

bottomThe key indicator for economic progress is

how big the middle-class has become and how rapidly it is growing.

Most people would readily agree that household possessions represent a family’s aspirations for a better quality of life.

For the purpose of defining “middle class” in a “developing economy” >>the combination of a television set, a refrigerator and some form of mechanized wheels: a scooter, a motorcycle, or even a second-hand car.

Anywhere in the world, that trio of possessions owned by the same household would place it above the bottom-end of that society’s socioeconomic pyramid.

By that token, Indonesia is making amazing progress.

Data from February 2012Just five years ago ending December of

2006, only 25 percent of households had the defining trio of worldly possessions.

In just five years, that number has catapulted upwards to 42 percent. That transformation of millions of homes in so short a timeframe is perhaps unparalleled anywhere in the world.

Five years ago, only 35 percent of the population had a refrigerator gracing the kitchen. Now that number has jumped to 50.

Five years ago, 51 percent of homes had a set of wheels standing outside, either two or four. Today, 73 percent of families have at least a motorcycle, or a car.

Even that everyday ‘essential’, the TV set, has moved up from 96 to 97 percent of homes. By any standard, this is a noteworthy achievement for all Indonesians, collectively.

Implications of emerging middle classRising middle class in Indonesia has helped

to transform the country's consumer market, with major implications for consumer goods companies:

Companies in a range of industries including tourism, education, healthcare and entertainment can expect greater business opportunities, as middle-class Indonesians are spending increasingly on discretionary goods.

Although the bulk of consumer spending in Indonesia is still on essentials (i.e. food, non-alcoholic beverages and housing), the proportion of discretionary spending in total consumer expenditure has been gradually rising, from 49.1% in 2006 to 54.2% in 2011

Boston Consulting Group estimates that Indonesia is home to 74 million 'middle class and affluent' consumers, with that number set to rise to 141 million by 2030.

McKinsey counts 45 million members of a 'consuming class', which it estimates will increase to 135 million by 2020.

But both are setting the bar very low. McKinsey, for example, is counting households with earnings of just US$7500 per year at purchasing power parity rates — hardly a fortune.

About 82% of Indonesia's population, or approximately 200 million people, live on less than approximately US$4 per day

Just 18% of Indonesians (44 million odd people), living on between about $4 and $20 per day, are starting to acquire some of the middle class life style

In this bracket, people are starting to be able to air condition their homes (16%); in cities, 25% will own cars.

The middle class is an urban phenomenon: 26% of city populations are middle class, compared to 9% in rural areas.

In fact, Indonesians are consistently found to be some of the most confident consumers in the world.

They believe their families will be better off next year, and that their children will have better lives than their own.

Education is a key aspect of this, and the more affluent classes are investing more in education at all levels.

Between 2006 and 2011, Indonesia's Gini coefficient rose from 33.0% to 37.7%, reflecting greater income inequality. A zero Gini coefficient represents perfect income equality and a score of 100% indicates absolute income inequality;

The widening wealth gap can undermine the business opportunities presented by the emerging middle class in that it can cause social and political discontent, threatening the business environment and economic growth in Indonesia.

Middle income trapCountries in the middle income trap have

lost their competitive edge in the exportation of manufactured goods because their wages are on a rising trend. However, they are unable to keep up with economically more developed economies in the high-value-added market.

As a result, newly industrialised economies such as South Africa and Brazil have not, for decades, left what the World Bank defines as the 'middle-income range' since their per capita gross national product has remained between $1,000 to $12,000 at constant (2011) prices

They suffer from low investment, slow growth in the secondary industry, limited industrial diversification and poor labor market conditions.

Demographic dataPopulation248,216,193 (July 2011 est.)

Age structure

0-14 years: 27.3% (male 34,165,213/female 32,978,841)

15-64 years: 66.5% (male 82,104,636/female 81,263,055)

65 years and over: 6.1% (male 6,654,695/female 8,446,603) (2011

est.)

The age structure of a population affects a nation's key socioeconomic issues.

Countries with young populations (high percentage under age 15) need to invest more in schools, while countries with older populations (high percentage ages 65 and over) need to invest more in the health sector.

The age structure can also be used to help predict potential political issues. For example, the rapid growth of a young adult population unable to find employment can lead to unrest.

Median age

total: 28.2 years male: 27.7 years female: 28.7 years (2011 est.)

Population growth rate

1.04% (2011 est.)

The average annual percent change in the population, resulting from a surplus (or deficit) of births over deaths and the balance of migrants entering and leaving a country.

The rate may be positive or negative.

The growth rate is a factor in determining how great a burden would be imposed on a country by the changing needs of its people for infrastructure (e.g., schools, hospitals, housing, roads), resources (e.g., food, water, electricity), and jobs.

Rapid population growth can be seen as threatening by neighboring countries.

Birth rate17.76 births/1,000 population (2011

est.)Death rate6.28 deaths/1,000 population (July 2011

est.)Net migration rate-1.08 migrant(s)/1,000 population (2011

est.)Urbanizationurban population: 44% of total

population (2010) rate of urbanization: 1.7% annual rate of change (2010-15 est.)

Birth rate:17.76 births/1,000 population (2012

est.)Average annual number of births during

a year per 1,000 persons in the population

Also known as crude birth rate. The birth rate is usually the dominant

factor in determining the rate of population growth.

It depends on both the level of fertility and the age structure of the population.

Death rate:6.28 deaths/1,000 population (July 2012 est.)Average annual number of deaths during a

year per 1,000 population Also known as crude death rate. The death rate, while only a rough indicator of

the mortality situation in a country, accurately indicates the current mortality impact on population growth.

This indicator is significantly affected by age distribution, and most countries will eventually show a rise in the overall death rate, in spite of continued decline in mortality at all ages, as declining fertility results in an aging population.

Net migration rate : -1.08 migrant(s)/1,000 population (2012 est.) the difference between the number of persons

entering and leaving a country during the year per 1,000 persons (based on midyear population).

An excess of persons entering the country is referred to as net immigration (e.g., 3.56 migrants/1,000 population);

an excess of persons leaving the country as net emigration (e.g., -9.26 migrants/1,000 population).

The net migration rate indicates the contribution of migration to the overall level of population change.

High levels of migration can cause problems such as increasing unemployment and potential ethnic strife (if people are coming in) or a reduction in the labor force, perhaps in certain key sectors (if people are leaving).

Urbanization: Urban population: 44% of total population (2010) Rate of urbanization: 1.7% annual rate of change

(2010-15 est.) Two measures of the degree of urbanization of a

population. Urban population, describes the percentage of the total

population living in urban areas, as defined by the country.

Rate of urbanization, describes the projected average rate of change of the size of the urban population over the given period of time.

Urban agglomeration is defined as comprising the city or town proper and also the suburban fringe or thickly settled territory lying outside of, but adjacent to, the boundaries of the city.

Major cities - population:JAKARTA (capital) 9.121 million; Surabaya

2.509 million; Bandung 2.412 million; Medan 2.131 million; Semarang 1.296 million (2009)

The population of the capital and up to four major cities defined as urban agglomerations with populations of at least 750,000 people.

Sex ratio Sex ratio: at birth: 1.05 male(s)/female

under 15 years: 1.04 male(s)/female 15-64 years: 1.01 male(s)/female 65 years and over: 0.78 male(s)/female total population: 1 male(s)/female (2011 est.)

The number of males for each female in five age groups - at birth, under 15 years, 15-64 years, 65 years and over, and for the total population.

Sex ratio at birth has recently emerged as an indicator of certain kinds of sex discrimination in some countries.

For instance, high sex ratios at birth in some Asian countries are now attributed to sex-selective abortion and infanticide due to a strong preference for sons.

This will affect future marriage patterns and fertility patterns. Eventually, it could cause unrest among young adult males who are unable to find partners.

Infant mortality rate:Total: 26.99 deaths/1,000 live births

male: 31.54 deaths/1,000 live births female: 22.21 deaths/1,000 live births (2012 est.)

The number of deaths of infants under one year old in a given year per 1,000 live births in the same year

This rate is often used as an indicator of the level of health in a country.

Life expectancy at birth:total population: 71.62 years

male: 69.07 years female: 74.29 years (2012 est.)

The average number of years to be lived by a group of people born in the same year, if mortality at each age remains constant in the future.

Life expectancy at birth is also a measure of overall quality of life in a country and summarizes the mortality at all ages.

It can also be thought of as indicating the potential return on investment in human capital and is necessary for the calculation of various actuarial measures.

Total fertility rate: 2.23 children born/woman (2012 est.) The average number of children that would be born per woman

if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age.

The total fertility rate (TFR) is a more direct measure of the level of fertility than the crude birth rate, since it refers to births per woman.

This indicator shows the potential for population change in the country. A rate of two children per woman is considered the replacement rate for a population, resulting in relative stability in terms of total numbers. Rates above two children indicate populations growing in size and whose median age is declining.

Higher rates may also indicate difficulties for families, in some situations, to feed and educate their children and for women to enter the labor force.

Rates below two children indicate populations decreasing in size and growing older.

Global fertility rates are in general decline and this trend is most pronounced in industrialized countries, especially Western Europe, where populations are projected to decline dramatically over the next 50 years.

THE performance of a nation in the health sector is usually reflected in indicators, such as mortality rates and life expectancy.

The lower the mortality rate and the higher the life expectancy, the better the health program in that country.

Unfortunately, the health program in Indonesia shows a low performance, as indicated by a high mortality rate and neonatal mortality rate.

For every 1,000 live births, 19 die within a month. In industrialized countries, neonatal mortality stands at four per 1,000 live births according to the World Health Organization in 2008.

Therefore, the government should seek every opportunity to bring down the neonatal mortality rate. This is crucial since Indonesia faces a demographic dividend that started in 2010 and will last until 2050.

The demographic dividend is expected to peak in 2025.

This will create a window of opportunity for Indonesia to reach a higher potential economic growth and welfare status, since the proportion of the population at a productive age exceeds that of a non-productive age.

A shrinking, young population could allow the government to save its budget and invest in economic activities and human wellbeing.

However, hopes of reaching those goals may not be realised if the government fails to improve the quality of the population who will enter the labor market in 2020-2050.

One segment of that population is those aged below 1.

The importance of bringing down the neonatal mortality rate is also shown by the higher contribution of this to infant mortality (under 1) and child mortality (under 5). The contribution of neonatal mortality to infant mortality is about 60 per cent, and to child mortality it is about 40 per cent (WHO, The State of the World's Children, 2008).

Generally, the causes of neonatal deaths are pneumonia, infections and diarrhoea

Health services for pregnant women remained below standard.

The results of a demographic and health survey in 2007 reported that only 73 per cent of pregnant women received anti-tetanus injections, only about 77 per cent of pregnant women consumed iron pills and only 46 per cent of pregnant women gave birth at health facilities.

The World Bank (2006) outlined four reasons that brought about the low coverage of pregnant women with access to health services in developing countries.

Reasons for the failure to provide pregnant women with access to health services Low education and knowledge. The majority of pregnant

women in developing countries lack knowledge on how to manage their pregnancies.

Women's exclusion from decision-making. In fact, pregnant women might know that they have to visit health services, but their husbands sometimes do not give them permission.

Lack of health facilities. This aspect becomes a major problem in some regions in Indonesia, especially remote areas where health facilities are rare.

Fourth are non-technical aspects, such as pregnant women who are not ready to undergo medical treatment provided by male doctors or medical workers.

The government needs to take these four factors into consideration in delivering health services.

Although the government, for example, gives pregnant women free access to health services, it is not a guarantee that they are ready to come and visit health centres.

Based on those reasons, it comes as no surprise that the health budget is enjoyed by higher-income groups rather than those in lower-income brackets.

Surveys conducted by the World Bank in 2004 in 21 countries discovered that 20 per cent of high-income groups received 25 per cent of the total health budget, compared with 15 per cent that went to 20 per cent of low-income groups.

It is, therefore, high time for the government to increase its health budget and distribute it fairly in order to reduce the mortality rate, especially in the neonatal group. The government cannot rely on women to treat their children themselves.

It needs to do more to increase the quality of life of the population, especially newborn babies. Years from now, they will not only become productive workers but will also be taking over leadership positions in the country.

Failure to improve their quality of life will mean that Indonesia will waste the population dividend and perhaps lead the nation to the brink of disaster.

Ethnic groupsJavanese 40.6%, Sundanese 15%, Madurese

3.3%, Minangkabau 2.7%, Betawi 2.4%, Bugis 2.4%, Banten 2%, Banjar 1.7%, other or unspecified 29.9% (2000 census)

ReligionsMuslim 86.1%, Protestant 5.7%, Roman

Catholic 3%, Hindu 1.8%, other or unspecified 3.4% (2000 census)

LanguagesBahasa Indonesia (official, modified form of

Malay), English, Dutch, local dialects (of which the most widely spoken is Javanese)

Literacy

Definition: age 15 and over can read and write total population: 90.4% male: 94% female: 86.8% (2004 est.)

School life expectancy (primary to tertiary education)

total: 13 years male: 13 years female: 13 years (2009)

Education expenditures2.8% of GDP (2008)Maternal mortality rate240 deaths/100,000 live births (2008)Children under the age of 5 years

underweight19.6% (2007)Health expenditures5.5% of GDP (2009)

Physicians density0.288 physicians/1,000 population (2007)Hospital bed density0.6 beds/1,000 population (2002)Obesity - adult prevalence rate2.4% (2001)

The Human Development Index (HDI) is a composite statistic of life expectancy, education, and income indices to rank countries into four tiers of human development.

It was created by economist Mahbub ul Haq, followed by economist Amartya Sen in 1990, and published by the United Nations Development Programme.

These were devised and launched by Pakistani economist Mahbub ul Haq in 1990 and had the explicit purpose "to shift the focus of development economics from national income accounting to people centered policies".

HUMAN DEVELOPMENT INDEX The index places Indonesia at 124th out of 187 countries

surveyed (2011) In addition, Indonesia again ranks lower than five of its

ASEAN counterparts, with Singapore leading in 26th place, followed by Brunei (33rd), Malaysia (61st), Thailand (103rd) and the Philippines (112nd).

Indonesia's 2011 HDI placing, which scores 0.617, however, is still higher than that of Vietnam (128th), Laos (138th), Cambodia (139th) and Myanmar (149th).

The 2011 list again puts Norway top of the index, with an HDI of 0.943, followed by Australia, the Netherlands, the United States and New Zealand, respectively.

“But when the index is adjusted for internal inequalities in health, education and income, some of the wealthiest nations drop out of the HDI's top 20. The US falls from #4 to #23, the Republic of Korea from #15 to #32, and Israel from #17 to #25,” the UNDP said in its 2011 Human Development Report.

Other top national achievers rise in the IHDI [Inequality-adjusted HDI] due to greater relative internal equalities in health, education and income. Sweden jumps from #10 to #5, Denmark climbs from #16 to #12, and Slovenia rises from #21 to #14,