Demographical Environmental (Tadjudin Noer Effendi)

8/7/2019 Demographical Environmental (Tadjudin Noer Effendi)

1/22


2/22

decline and the proportion of adult population decrease led to the potential market

will change. For example, the change of population structures of Yogyakarta and

Central Java toward aging population as life of expectancy increase and decrease

number of adult population because or fertility decline subsequently have to force the

government implementing policy to close down or to merger many primary schools.

Several years after, the secondary schools are also finding difficulty to get new

pupils. This gives an illustration on how the change of population structure could

determine the public policy. In contrary, the state has to spend a lot of fund to build

new schools to serve young adult population need in the region where fertility rates

still high. In some cases in order to make available its population need, the state

have to provide more budget and grant. Moreover, more funds have to endow with

subsidize to the region that has high poverty incidence or low quality of population.

This perspective assumes that demographic aspect; especially population growth is

place an independent variable.

Other perspective assumes that demographic aspect could place as a

dependent variable. This means that business activities could be influenced

demographic variable. However, this could be occurring in a particular area or

country. For instance in Batam before business activities (industries) are

concentrated there, the number and the population growth was very low. Since

business activities are located there, the rate of population growth increased

significantly because abundant of migrants from other area migrated to Batam. In

1990, the number of population was about 106.667 and in 1990 increase to 434.299

and in 2005 increase close to 700.000. This means after industrial development, the

population growth of Batam a year in period 1990-2005 vary between 5-10%. Rapid

population growth is a result of in-migration as an attraction of the concentration of

business activities (industries) there. However, the bulk of migrants have created

new problems in Batam, such as crime, housing problem and environment

degradation. This in-migration also led to population structure (age) of Batam aremore productive and young potential people. This means that business activities can

be a magnet for people (labor) and lead to determine population aspect, especially

population growth and age structures.

From the previous discussion, it can be learned that demographic information

could help some one to make decision about type, equality, and quantity for their

business. Without those data and information the businessman may be find difficulty

in developing their activities. However, business activities can determine population

aspects as well. This gives ample reasons why businessman needs to study

demographic aspects. Accordingly, this articles discusses several basic demographic

2


3/22

data and information such a number, distribution and population density, population

structure (age, gender, education and employment) also their change and to evaluate

its implications on business.

NUMBERS, DISTRIBUTION AND POPULATION DENSITY

From the number of Indonesians population in 2005 (213.4 million), lies in

fourth place after RRC (1,264.5 million), India (1,002.1 million) and United State

(275.6 million). This large number of population has potential to attract investor

because there would be big market opportunities and an abundant amount of

potential labor. Of course, this would help the development process and stimulated

economic growth. Indonesia is one of destination countries for industrial expansion of

industrial countries (Japan, South Korea, Hongkong, United States). Investment in

several business activities has stimulated economic growth ranging between 5-8%

per year. This economic growth has led to open opportunities for other business

activities.

However, this investment has created many problems cause of the unequal of

quality and population distribution. Regions have large population such as Java may

can attract more investors while other regions such as Papua, Maluku less attractive

for them. Table 1 indicates the comparison of the population in Java and outside

Java in the year 2005. Table 1 indicates about 60% of total population of Indonesia of

live in Java, an island with its area covers only 7% of the total land area of the

country. Especially, Jakarta population density in 2005 is about 13,334 persons per

square kilometer (see Table 1). The high of population density indicates that Jakarta

is a place has been more attractive for doing business both trade and service.

However, it has been probably beyond the limit of carrying capacity of the

environment to support the need of its population. This limitation has an implication,

especially the cost in developing business, especially manufacturing, in Jakarta. It is

more costly in Jakarta comparison to out side of Jakarta. The reason is that in

developing business activities there is a need take into account the impact upon the

environment. Environment has to protect and to minimize the impact of business on

declining the quality environment of livelihood. This is important to consider in

maintaining the sustainable development. To achieve this, an effort to prevent the

degradation of environment we need to develop a plan and policy in controlling the

impact of business activities on quality of environment.

3


4/22

Table 1

Number and Population Density by Island and Provinces in 2005

Island/provinces No.of population* % Pop.Density/sq km**

SumatraNanggro Aceh Darussalam

North Sumatera

West Sumatera

Riau

Jambi

South Sumatera

Bengkulu

Lampung

Bangka Belitung

Kepulauan RiauJava

DKI Jakarta

West java

Central Java

Yogyakarta

East Java

BantenB

ali

Nusa Tenggara

West Nusa Tenggara

East Nusa tenggara

KalimantanWeast Kalimantan

Central Kalimantan

South Kalimantan

East KalimantanSulawesi

Nort Sulawesi

Central Sulawesi

South Sulawesi

Southeast Sulawesi

Gorontalo

MalukuN

orth Maluku

Papua

39,616,3664,213,821

11,688,987

4,555,810

5,563,406

2,627,216

6,767,645

1,546,286

7,104,572

1,042,828

1,273,011

128,025,689

8,839,247

38,886,975

31,896,114

3,337,095

36,058,107

9,008,1513

,378,092

8,078,487

4,169,695

4,243,182

12,068,1304,042,817

1,913,026

3,271,413

2,840,87415,749,821

2,121,017

2,290,969

8,457,123

1,960,697

920,015

1,249,212

881,867

2,439,838

18.62.0

5.5

2.1

2.6

1.2

3.0

0.7

3.2

0.4

0.5

60.0

4.1

18,2

14.9

1.6

16.9

4.21

.6

3.8

1.9

1.9

5.61.9

0.9

1.5

.1.37.4

0.9

1.0

4,0

0.9

0.4

0.60

.4

1.1

9678

169

106

52

49

73

78

201

65

15

3,260

13,344

1,126

982

1,049

757

1,044

610

208

90

36

28

12

75

12

82

139

36

85

51

75

31

29

7

Total 213,375,287 100 110

Source: *BPS, 2006, Population of Indonesia: Results of the Inter Census Population Survey 2005,

Serie S1, Jakarta, p.51

**BPS, 2007, Welfare Indicator 2006, Jakarta, p.112

4


5/22

Java, Bali and Sumatra (so called Western Indonesia) have numbers of

population about 80.2% of Indonesia population. The rest about 19.8% of population

are distributing in Kalimantan, Sulawesi, and other islands (so called Eastern

Indonesia). Papua with its area cover 19.3% of the total inhabited only have 1.1% of

Indonesian population. This unequal population distribution has an important

implication on business development. The eastern of Indonesia is less attractive to

investor has led to the business activities not developed in a good way in the region

in comparison to Java and the rest of Western Indonesia. As a result, the

development process is faster in Java and the rest of western than eastern Indonesia

and this has an implication on inequality of welfare.

Demographic data presents in Table 1 could be use for an investment

planning as well. Java has a population density about 3,256 per square kilometers

could be use as an indicator that labor and market are available there. However, it

has limitation because land for industries has been limited so that land price is

relatively expensive in comparison to other areas where population density is low.

Another problem needs to be considering in areas having high population densities is

for preventing environmental degradation and pollution. This need more fund so that

the cost higher in comparison to the lower one. Labor cost may be lower but cost for

environmental management in order to support sustainable environment may be

more expensive. Those data can help the businessman to consider other alternatives

in decision for their investment.

POPULATION GROWTH

Population growth can be use as basic information for business investment.

They not only assisting in understanding the existing condition but it also can give us

information about trend and prospect of population in the future. Table 2 presents the

population growth rate by province of Indonesia in period 1980-1990, 1990-2000 and

2000-2005. Data in Table 2 indicate that there is a significant provincial variation in

the growth rate of population in period 1990-2005, ranging from 0.18% of West

Kalimantan and 4.15% of Riau Island. Those data also presents that in several

provinces the population growth in the past 10 years under 1%, such as in Jakarta,

Central Java, Yogyakarta and East Java. West Java located surrounding Jakarta, its

population growth about 2.7% above national growth rate. It seems that the district of

Jabotabek as a greater of Jakarta Metropolitan has been received more migrants and

peoples move out from Jakarta. This fact offered an indication that to develop

business (retail and service) may be better to invest outside Jakarta than in center ofJakarta.

5


6/22

Table 2Population Growth by Provinces in period 1980-1990 and 1990-2000

Provinces Pop. Growth

1980-1990*

Pop. Growth

1990-2000*

Pop. Growth

2000-2005**

Aceh

North Sumatra

West Sumatra

Riau

Jambi

South Sumatra

Bengkulu

Lampung

Bangka Belitung

Riau Island

Jakarta

West Java

Central Java

Yogyakarta

East Java

Banten

Bali

West Nusa Tenggara

East Nusa Tenggara

West Kalimantan

Central Kalimantan

South Kalimantan

East Kalimantan

North Sulawesi

Central Sulawesi

South Sulawesi

Southeast Sulawesi

MalukuMaluku Utara

Irian Jaya Barat

Papua

2.72

2.06

1.62

4.31

3.38

3.09

4.38

2.65

-

-

2.41

2.57

1.18

0.57

1.08

-

1.18

2.15

1.79

2.68

3.88

2.32

4.42

1.60

2.87

1.42

3.66

2.78-

-

3.41

1.67

1.17

0.57

3.79

1.80

2.15

1.83

1.05

0.97

-

0.16

2.17

0.82

0.68

0.63

3.21

1.22

1.31

1.92

1.53

2.67

1.40

2.74

1.35

1.97

1.14

2.86

0.651.60

-

2.60

0.52

1.35

1.45

3.22

1.83

1.78

1.26

1.12

3.00

4.15

1.17

1.75

0.48

1.39

0.86

2.20

1.44

0.86

2.19

0.18

0.63

1.92

3.05

1.25

1.07

0.96

1.52

1.421.64

3,.50

2.17

Indonesia 1.97 1.45 1.30

Source: *BPS, 2000,Population of Indonesia: The Result of census 2000, Jakarta, p.5

**BPS, 2007, Welfare Indicator 2006, Jakarta, p.111

6


7/22

Province outside Java that had experiences in the decline of population growth is

Aceh, South Sulawesi, West Nusa Tenggara, West Kalimantan and Central

Kalimantan. There have been several aspects causing the decline of population

growth. The decline of population growth in Java provinces are partly causing of

fertility and influx of out-migration provinces the population growth in the past 10

years under 1%, such as in Jakarta, Central Java, Yogyakarta and East Java. West

Java located surrounding Jakarta, its population growth about 2.7% above national

growth rate. It seems that the district of the region. Whereas in Aceh the decreases

of population growth because natural disaster of Tsunami that killed thousand

peoples. West and Central Kalimantan, the decrease of population since the large

number of population moved to other areas cause of social disturbance (riot and

social conflict) that occurred since 1998. Fertility and mortality decline in several

provinces of Java indicates that there is social change toward small family in

response to family planning in the last 10 or 20 years ago. This would be effect on

the change of the age population structure, and as a consequent, the age structure

will change toward aging population. This will be discussing in the next section.

The decline of fertility rate in few provinces have caused by some factors namely:

Social change, especially female education has increased and female has

initiated to enter the labor market of public sector in order to get wages. This

brings change in social (life) behavior of women, especially toward marriage.They tend to delay marriage since they have to finish education for the sake

or their career development in work place. For the marriage women, planning

spacing of pregnancy is becoming a norm and the preference to have

children depend on the family economic condition. Two children have already

been a norm in young family.

The awareness in birth control has spread out and has already been

accepted in the society.

The first age marriage has increased significantly, especially for younggenerations followed with young eligible couples.

Small family norm are starting to be accepted and children are seen to be an

economic burden (not as fortune any more).

Service towards the effort to controlling and delaying pregnancy has available

and easy to find.

The decline of mortality rate is cause from several factors namely:

Prevention for infection and spread disease has improved significantly.

People are already free from spread disease.

7


8/22

Primary health care had developed and spread out so that people have easy

access to find the health service.

Access to service for pregnancy, childbirth, and modern facilities for mother,

baby and child are already easy to find.

Incidence for poverty tended to decline due to family health nutrition had been

improving and nutrition for child under five years has improved significantly as

well.

Life expectancy for all age has increased.

Table 3 present some indicator of crude birth and death rate, number of medical

doctor per population, and life expectancy in 1971 and 2001. It shows that in all

indicators confirm that within three decades there are significant changes in

demographic aspects. Crude Birth Rates (CBR) and Crude Death Rates (CDR),

infant mortality has decreased significantly. Families have accepted having two

babies and may become a norm among young couples. The social changes toward

small family norm have an implication on market opportunity of goods and service.

To a certain degree in a normal condition, this changes lead to changes in family

consumption behavior causing the ability to save pert of family incomes. The

increase in purchasing power that could stimulate a market expansion for both goods

and services.

Table 3Crude Birth and Death Rates Medical Doctor per population and

Expectancy of life in 1971 and 2005

Indicators 1970* 2005**

CBR (1/1000)

CDR (1/1000)

TFR

Medical doctor per population

Infant mortality (per 1000

Life Expectancy of female when

having a baby (year)

Female

Male

40

18

5.5

26,820

104

49

46

23

9

2.4

5,150

32

57

55Source: *World Development Report, 1991, Investing in Health, Washington, p.59

**BPS, 2002, Welfare Indicators, Jakarta, 58

8


9/22

Data in Table 2 also indicates that several provinces where the population

growth have increased above national rate. The provinces are Riau, Riau Island,

West Java, East Kalimantan, Central Kalimantan, and Papua. This fact can use as

an indicator that some business activities have attracted people migrate as an effort

looking for job to those provinces. For Central Kalimantan, Southeast Sulawesi, and

Papua beside in migration there is might be in association with the high fertility as

result of low quality of human resources cause of the high proportion of poverty (see

Table 4). By analyzing the population growth, we have an idea that there is open

opportunity in those provinces to do business, but the low level of living condition, low

family income as indicated by high poverty rate, the market might is quite limited

leading the prospect for business also limited.

Table 4

Life Expectancy, Infant Mortality Rate and Poverty Rate of selected Provinces in 2005Provinces Life Expectancy* Infant Mortality Rate* Poverty Rate**

Jakarta

Central Java

Yogyakarta

East Java

West Java

West Nusa Tenggara

Maluku

Papua

East KalimantanRiau

West Sumatera

74.0

71.0

74.0

70.0

69.0

64.4

67.7

68.4

71.670.1

69.2

14

25

14

29

33

51

38

35

2328

32

3.18

21.11

19.14

20.08

12.10

25.38

32.13

38.69

11.5713.12

10.46Source: *BPS, 2007,Welfare Indicators 2006, Jakarta, p.115

**BPS, 2007, Statistical Yearbook of Indonesia 2007, Jakarta, p. 585

In Riau and East Kalimantan population growth have increased caused by

influx of in-migration (young peoples) looking for job there. These areas have

experienced rapid development activities since there are many investors investing in

industries and other business activities. For example in Batam, Riau Island, bulk of

investment in 2000 the economic growth of Batam reached approximately 7.67% a

year. Batam City in the period of 1990-2000 has population growth approximately

15.63% and in 2000-2005 decreasing about 6-7%, but still 4 times of national

population growth. The industries activities have attract more labor migrated to this

region. Free zone policy has attracted investors to invest in varied of business

activities there. This has created a lot of job opportunities and business activities both

formal and informal to support the need of population. This has led to attract more

productive of young people looking for job there. It is not surprisingly; therefore, the

age structures of Batam tend to dominate by productive age groups. This of course

9


10/22


11/22

Table 5

Population Structure by Age of Selected Provinces in 2005

Age Structure Indonesia (%) Yogyakarta (%) Riau (%) Papua (%)

0-14

15-64

>65

29.0

66.3

4.7

21.3

69.5

9.2

32.8

65.0

2.2

35.5

63.7

0.8

%

N

100

213,375,287

100

3,337,095

100

4,563,406

100

2,439,834

Dependency Ratio

58

44

53

57Source: BPS, 2006, Population of Indonesia: Results of the Intercensal Population Survey 2005,

Serie S1, Jakarta, p.51

Riau and Papua have experience of high population growth partly caused by

in-migration and fertility, which has a different effect on population structure in

comparison to Yogyakarta. There is tendency that both provinces, the age structure

tend to have high proportion of population in age 0-15. This has different implication

in comparison to Yogyakarta. To support the need of these populations the state

needs to spend a lot fund to build new social facilities, such as public service: school,

hospital, and others. This would create business opportunity but the market may be

very limited. Moreover, the economic status or poverty rate such as in Papua is still

high whereby the purchasing power also low.

Population structure by age also can be used to examine the dependency

ratio (population age 0-14 plus >65 or unproductive divided by population age 15-49

plus 15-49 or productive population). In Indonesia dependency ratio are 58 that mean

100 productive populations carry on 58 unproductive populations. The decline of

population growth seems to have an influence upon dependency ratio. Yogyakarta

dependency ratio is lower in comparison to Riau and Papua. The high dependency

ratio may be could hinder development process because part of the income has to be

spent for unproductive population need leading to the low purchasing power of

population. This information can help what kind of business chosen if would like to do

business in the area like that.

The population age structure is able to provide information about family

structure (size). Since the proportion of age 15-64 is higher ranging from 65% to 68%

in Papua and Riau province and national level, this indicate that number of young

families is bigger. Young family needs many housing facilities, domestic goods, both

secondary and tertiary goods than old families. In normal economic condition, this

may able to create market for business activities.

Based on the population growth and age structure data we could predict thechange in age structure for several years ahead. This could help to develop a

11


12/22

business planning several years ahead. If the data is available, we could make

several assumptions on the decline of fertility rate, mortality rate and migration and

then incorporating them into a model so that several alternatives of change of age

structure could be developed. Based on those assumptions we could make several

planning alternative for business development. Table 6 contains data result from

population projection in several provinces for the year 2010 based on an assumption

that population growth, fertility, mortality, and migration are similar to the year 2000-

2003 fell from 44% to 10% for men and from 69% to 16% for female. In addition, in

this period also experienced a rise in secondary enrolment from 10% to 40%. Despite

a massive effort carried out by the state, in term of education level, Indonesia lagged

far behind the neighboring countries such as the Philippines, Malaysia, and

Singapore. More than two third of the population above 10 years old are only

graduated from primary school. Graduated high education (tertiary education) are

very low about 2% in 1990 and increased to about 4% in 2005, except Jakarta,

Yogyakarta, Bali, East Kalimantan, Kepulauan Riau (see Table 7). Low level of

education to some extent has implication on the quality of human resources led to

low of purchasing power since they involved in low wages of employment (informal

sector). In Eastern Indonesia, the proportion of population had graduated from

secondary and tertiary not much difference from rest of Indonesia. This may has

influenced why investor not interested in to invest their capital in some provinces of

Indonesia. Not only skill labors are difficult to find out but also the market could not

develop cause of purchasing power is lower.

Table 6 present the projection result, there is a tendency that Indonesia

population would change toward old population. In Yogyakarta the proportion of

ageing population was increasing while the population under 15 was decreasing.

Riau in the year 2010 do not severe any significant changes, only the population

aged 15-64 a bit increasing. Population structure in Papua for 2010 in not much

different from the structure in the year 2000, for the next 10 years, according to theresult of population projection of Riau and Papua they would not need any significant

change yet. In Yogyakarta there would be needed business planning which could

fulfill the needs of the ageing population. Businesses that are serving baby needs

and children or population under 15 years old have reduced.

These aggregate shifts in age structure are very important because many

needs for good and services are strongly concentrated in particular age groups. This

will cause corresponding variations in the level and type demand for particular goods

and service. It is difficult to find data refer to Indonesia that can use to show the

relationship between expenditure and age structures. To illustrate those relationships

12


13/22

we use examples Australian household expenditure and American expenditure by

various broad categories according to the age structures see Figure 1 and Figure 2.

Figure 1 indicates that the expenditures of household for recreation tend to increased

gradually up age groups 45-55 and then decrease gradually. This means that age

groups below 33-35 are potentially for recreation market. The market for clothing,

medical care, housing and food could be identification as well. This pattern similar to

the united state as indicated in figure 2. By analyzing relationships between age

structure and household expenditure, we able to identified demand (market) for

various goods and service. It is important to note that age structures not only main

factor shaping demand for a product, but it can be use to understand the potential

market. This means that one of the areas where demographic analysis may be most

helpful to businessman is that it can help in identification the location of potential

market. In addition, it can help in understanding the behavior of the diverse

consumer groups that make up markets for goods and services both for existing

situation and for the future.

FIGURE 1

Australia: Average Weekly Household Expenditure on Selected Items by Age, 1988

0

20

40

60

80

100

120

24 and

under

25-34 35-44 45-54 55-64 65+ age

housing food recreation clothing medical care

Source: Hugo, Graeme, 1981, p. 8

13


14/22

FIGURE 2United States: Expenditure on Selected Items by Age, 1988

0

400

800

1200

1600

2000

less than

25

25-34 35-44 45-54 55-64 65-74 75+ age

rent food away from home education health care

Source: Hugo, Graeme, 1981, p. 9

Education

Structure and level education of population is important data and information

can be use for helping in developing business activity. Data and information onpopulation education structure and level of a region could give a picture of skill

formation of the labors that is needed for supporting business activities. The region

has low level of education maybe less attractive for business activities which needs

support of skilled labors. For business activities that do not really on unskilled labors

the low level of education structure would not be a problem but the level of wage

would still be in consideration. Usually educated skill labors require different wages

from unskilled labors. Business activities that are trying and seeking to find out low

wage levels tend to look for regions have low level of education.

Education level of population in normal condition could also be used as an

indicator for understanding economic status of population. Regions with relatively

have high proportion of educated people tend to have high incomes. Hence, it could

also be used as proxy purchasing power of population. The life style and the need of

population are influencing by education level. Based on those reasons, the need for

goods and service for educated and uneducated people are different. As an example,

the computer business could develop well in Yogyakarta because the proportion of

highly educated populations is higher but computer business would not develop in

14


15/22

regions where the proportion of educated population is low such in Papua or Central

Kalimantan.

In the period between 1973 and 1991, the state has spending large

investment for school building program. The out come is impressive, primary

enrolment gradually increase close to 100%. As a result, there was a steady

declining in illiteracy, between 1961 and - 2003 fell from 44% to 10% for men and

from 69% to 16% for female. In addition, in this period also experienced a rise in

secondary enrolment from 10% to 40%. Despite a massive effort carried out by the

state, in term of education level, Indonesia lagged far behind the neighboring

countries such as the Philippines, Malaysia, and Singapore. More than two third of

the population above 10 years old are only graduated from primary school.

Graduated high education (tertiary education) are very low about 2% in 1990 and

increased to about 4% in 2005, except Jakarta, Yogyakarta, Bali, East Kalimantan,

Kepulauan Riau (see Table 7). Low level of education to some extent has implication

on the quality of human resources led to low of purchasing power since they involved

in low wages of employment (informal sector). In Eastern Indonesia, the proportion of

population had graduated from secondary and tertiary not much difference from rest

of Indonesia. This may has influenced why investor not interesting to invest their

capital in some provinces of Indonesia. Not only skill labors are difficult to find out but

also the market could not develop cause of lower purchasing power.

Data from Table 7 shows that within 15 years, from 1990 to 2005, the change

of education level of population not significant. The proportions of primary educated

populations are decreasing followed by increasing of graduates of secondary school

but the proportions of population that have graduated from tertiary education are still

low. Only a few provinces such as Jakarta, Yogyakarta, Bali, and East Kalimantan

show significant increase. This indicates that improvement of welfare have not shown

any significant changes in several provinces. From the business point of view, those

changes have not yet give meaning because the possibility of market expansion isstill difficult to develop. May be this is one of the obstacles in tracking investors to

invest their capital in several provinces, especially in the eastern provinces of

Indonesia.

15


16/22

Table 7

Education Structures of Population by Province in 1990 and 2005

1990*

Education (%)

2005**

Education (%)

Province

Primary Secondary Tertiary Primary Secondary Tertiary

Ache

North Sumatra

West Sumatra

Riau

Jamb

South Sumatra

Engulf

LampingBangka Belitung

Kepulauan Riau

DKI Jakarta

West Java

Central Java

Yogyakarta

East Java

Banten

Bali

West NusaTenggara

East Nusa Tenggara

West Kalimantan

Central Kalimantan

South Kalimantan

East Kalimantan

North Sulawesi

Central Sulawesi

South SulawesiSoutheast Sulawesi

Gorontalo

Maluku

Maluku Utara

Papua

73.2

69.8

72.1

75.8

78.3

79.1

76.8

81.7-

-

51.9

80.9

83.0

67.7

81.2

-

75.6

84.5

86.2

83.7

76.3

78.2

69.2

71.2

78.0

76.777.8

-

74.9

-

79.6

25.4

28.7

26.1

22.8

20.5

19.8

21.5

17.5-

-

42.8

17.8

16.0

29.4

17.6

-

22.4

14.5

12.8

15.3

22.6

20.6

28.5

26.9

20.6

21.520.8

-

23.7

-

19,0

1.4

1.5

1.8

1.4

1.2

1.1

1.6

0.8-

-

5.3

1.3

1.0

2.9

1.2

-

2.0

1.0

1.0

1.0

1.1

1.2

2.3

1.9

1.1

1.81.4

-

1.4

-

1.4

51.9

55.7

61.8

60.3

63.0

64.2

62.7

68.569.7

45.8

39.1

66.6

71.2

52.1

67.3

63.4

60.5

76.8

78.9

69,6

63.2

66.3

53.3

53.0

67.7

66.866.1

74.2

59.8

61.9

70.7

45.2

40.8

33.5

36.6

33.3

32.3

33.6

29.228.1

48.5

50.8

29.6

25.7

39.2

29.4

33.0

33.2

21.1

18.9

28,1

34.0

29,9

41.4

42.5

28.9

28.829.8

23.2

36.5

35.7

26.6

2.9

3.5

4.7

3,1

3.7

3.5

3.7

2.32.2

5.7

10.1

3.8

3.1

7.9

3.3

3.6

6.3

2.1

2.2

2.3

2.8

3.8

4.4

4.5

3.4

4.44.1

2.6

3.7

2.4

2.7Source: *BPS, 1992, Population of Indonesia: Result of Census 1990, Seri S2, p.141

**BPS, 2006, Population of Indonesia: Results of the Inter census Population Survey 2005,

Serises S1, Jakarta, p. 102

16


17/22

Employment

Besides education as discussed in the previous section, labor force and

employment data could also be use as an indicator to examine the social and

economic transformation process of a region. Labor force participation rate could

show populations participation in labor market. The higher labor participation rates

means the working age populations who are in endeavor to be involved in economic

activities are high. Population growth, the expansion of education, the willingness of

female to enter labor market, and the type of employment in a region could determine

labor force participation in the labor market. Regions which is still depend much on

agricultural sector or informal sector as a source of their income, the labor force

participation rate are significantly higher compared to regions where the economy

rely on manufacturing sectors. Understanding these data and information,

businessman could examine the changes that will happen and could develop a plan

or model for predictions on labor force supply and market prospect for business

development or expansion.

In period 1990-2005, the labor force participation in all provinces has

experienced a significant increase (see Table 8): from below 60% rise to a level

above 60%. This reflects that the flow of working age population for entering labor

market is increasing. Population growth that occurred 20 years ago has contributed

to this increase. Babies born 20 years ago are starting to enter the labor market. Thisincrease of labor participation rate might also cause of the increase of female labor

force entering the public sectors a long with the increase their education. However,

not all of the working age populations acquire employment as their aspiration. Most

of them are continuing looking for jobs owing to the competition to enter labor market

more tight in recent years. As the results, open unemployment has been increasing

more than twice in period 1990-2005. This is an indication that labor market not able

to absorb labor force. This means that economic transformation could not happen led

to hamper in improving the quality human resources. This is of course as impact ofeconomic crisis that take place since the mid of 1997.

During economic crisis, access to job opportunities in informal sectors

became even more difficult to be entering by labor force. The competition became

even difficult because among middle class workers and skill labor during the

economic crisis seek to find prosperity in informal sector. Many workers of the formal

sector that has discharged or received trouble in putting an effort in formal sector

also attempt to enter the informal sector. Economic crisis has effect the slowing down

of economic activities, except agricultural sectors. In fact, several sectors such as

17


18/22

Table 8Labor Force Participation Rate and Open Unemployment by provinces 1990 and 2003

1990* 2005**Province

Labor ForceParticipation

Rate (%)

OpenUnemployment

(%)

Labor ForceParticipation

Rate (%)

OpenUnemployment

(%)

Ache

North Sumatra

West Sumatra

Riau

Jambi

South Sumatra

Bengkulu

Lampung

Bangka Belitung

Kepulauan Riau

DKI Jakarta

West Java

Central Java

Yogyakarta

East Java

Banten

Bali

West Nusa Tenggara

East Nusa Tenggara

West Kalimantan

Central Kalimantan

South Kalimantan

East Kalimantan

North Sulawesi

Central Sulawesi

South Sulawesi

Southeast Sulawesi

GorontaloSulawes

Maluku

North Maluku

Irian Jaya Barat

Papua

53,2

53,9

51,0

53,2

56,6

54,9

59,5

56,8

-

-

48,7

49,7

58,6

63,4

57,3

-

61,7

59,2

63,2

61,2

58,7

57,8

53,6

51,3

54,5

44,1

53,5

--

49,6

-

-

60,9

2,8

3,2

3,0

2,8

1,9

2,9

1,8

1,9

-

-

7,1

4,1

2,6

2,5

2,7

-

2,0

2,2

0,8

1,9

1,8

3,3

4,3

4,3

2,7

4,8

3,3

--

3,4

-

-

3,1

68.4

71.9

62.5

62.8

66.0

71.2

75.5

68.9

65.0

64.2

63,1

62.9

71.1

71.9

69.5

63.0

79.1

70.1

79.9

73.5

73.2

71.7

64.7

62.3

66.9

63.3

71.1

62.861.0

59.2

69.8

71.7

78.3

12.5

11.0

11.5

13.9

8.6

8.6

6.1

6.9

8.1

12.4

14.7

14.7

8.6

5.1

8.5

14.2

4.0

8.9

5.5

8.6

4.8

6.2

9.0

14.4

7.6

13.6

8.9

9.86.4

12.3

8.9

10.2

7.1

Source: *BPS, 1992, Populations of Indonesia: Result of Census 1990, Jakarta, Seri S2, p.267

**BPS, 2007, Statistical Yearbook of Indonesia, Jakarta, p. 84

18


19/22

construction, manufacturing industries, finance and trade decreased to a negative

level (Boediono, Ace Suryadi, and Rusman Heriawan, 1999). In that condition, many

business activities are suffer from bankruptcy. This condition was very difficult for

business activity actually, before the economic crisis if we had already made effort to

pay close attention to statistic numbers we could have anticipated possibilities that

could occur. But what

We have to bare in mind that we could not expect that economy crisis would

happen as we experienced, moreover unexpected political variable had came to

influence. An important lesson we could gain from that experience is that inefficient of

management, with no transparency and no accountability has destroyed all of the

essential potency of economic activities. As a result, unemployment increase, social

conflict and social disturbances occur everywhere, investors withdraw from Indonesia

and business activity becomes sluggish with much less prospect.

The slowing down of business activities associated with economic crisis has

hampered labors transformation from agriculture towards industrial sector or from

traditional toward modern sectors. Despite agriculture continued being a vital source

of employment, the shift towards manufacturing has occurred since 1990 (see Table

9). In 2005 except Jakarta, agriculture continued to employ the labor force. During

economic crisis agriculture sector have to absorb many return workers of urban

areas that have lost their job because of the firm bankruptcy. For survival strategy,

most of urban workers have to return to their home villages. This have increasing

number of disguised unemployment due to the possibility to find out a full time job is

quite difficult in the villages. The proportion of disguised unemployment before crisis

is about 35% and the largest proportion are in the villages (Johnson: 1997:35).

During economic crisis, the proportion of disguised unemployment has reaching 40-

50 millions or 50%. These employment problems became more complicated because

during the crisis, thousand of migrant workers who are working in Malaysia and

Singapore are return to the home village.Like in Jakarta and in several large cities, many middle class people,

including celebrities, seek to enter informal sector during the crisis. Because of that,

the proportion of workers entering informal sectors increase from 65% in 1997 (the

beginning of crisis) and became 68% in 1998 (during the crisis) all of that, causes a

decrease in their income and purchasing power rapidly. The number of population

living under poverty has increased from 12 million in the beginning of 1997 to 80

million in the middle of 1998. Poverty rate in the rural areas have reached 53% and in

the cities 39% (ILO, 1998: 99). The poverty rate could still be debatable

19


20/22


21/22

because each formula have different outcome. Without the formula, in reality we

could witness that incidence of poverty have grown rapidly because of riots and

social conflict that are happening in several places. It not only forces populations to

flee and life in tents or evacuation place but also force million of people to lose their

homes and properties. This means, during the economy crisis followed with many

social riot cause people that live in poverty line increase significantly. This surely

does not give advantage for business atmosphere. There is a tendency the economic

condition being better since 2003 but the instability of political has been hindering of

the investor to come to Indonesia leading to business opportunities not developed as

expected.

CONCLUDING REMARKS

Demographic data and information have significance for business activities

because they can help businessman to develop, expand and also planning for their

enterprises. It is important to bear in mind that the relationship between demographic

variables and business is not linear relationships. Their relationships only could

happen in a normal condition. In an economic crisis condition, the relationship is

quite difficult to be examined. Without any carefulness, the conclusion that we take

might could be misleading.

21


22/22

Documents

Demographical Environmental (Tadjudin Noer Effendi)