Demographic environment

Dewi H. Susilastuti, Ph.D.

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

Indonesia
With 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 class
The middle rests between the top and the

bottom
The 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 familys

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 societys socioeconomic pyramid.

Data from February 2012

Just 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

class
Rising 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, nonalcoholic 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 t
he 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

Middle income trap

Countries 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 data
Population
248,216,193 (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 rate
17.76 births/1,000 population (2011

est.)
Death rate
6.28 deaths/1,000 population (July 2011
est.)
Net migration rate
-1.08 migrant(s)/1,000 population (2011
est.)
Urbanization
urban 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 20202050.
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 groups
Javanese 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)
Religions
Muslim 86.1%, Protestant 5.7%, Roman
Catholic 3%, Hindu 1.8%, other or unspecified
3.4% (2000 census)
Languages
Bahasa 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 expenditures
2.8% of GDP (2008)
Maternal mortality rate
240 deaths/100,000 live births (2008)
Children under the age of 5 years

underweight
19.6% (2007)
Health expenditures
5.5% of GDP (2009)

Physicians density
0.288 physicians/1,000 population (2007)
Hospital bed density
0.6 beds/1,000 population (2002)
Obesity - adult prevalence rate
2.4% (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,