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Social protection: World Bank’s formula for Indonesia to unlock growth potential
President Joko “Jokowi” Widodo has envisioned that Indonesia will become a developed country in 2045.
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Students show the new Indonesia Smart Cards (KIP) they received from the government in Jakarta on Wednesday. The KIP provides cash assistance to students from low- income families to buy books and other school supplies. (JP/Seto Wardhana)
T
he World Bank has suggested the government focus its structural reform agenda in a number of areas, including the country’s social protection scheme to improve people’s welfare and unlock growth potential in the medium term.
Reforming the country’s social protection scheme would ensure that people entering the workforce were under the best possible conditions to thrive in the labor market as Indonesia would soon transition from being a demographic dividend country to an aging society, according to the bank’s Indonesia Economic Quarterly issued Wednesday.
“Social protection helps build, employ and protect human capital. It helps build human capital because a demographic transition means that there are fewer Indonesians entering [the] labor market and more will enter old age,” said World Bank lead Indonesia economist Frederico Gil Sander in Jakarta during the report’s release event.
“This demographic transition means you will have to invest a lot in these fewer people joining the labor force because this is the key asset that Indonesia has in the future.”
The number of older Indonesians will increase significantly, with important implications for health care and pension systems, according to the report. Moreover, technology will continue to change the nature of the labor market and work itself, increasing the need for skilled labor.
President Joko “Jokowi” Widodo has envisioned that Indonesia will become a developed country in 2045 with near-zero percent poverty rate and Rp 320 million annual per capita income, a more than fivefold increase from today’s level. The GDP is then expected to reach US$7 trillion, from a little over $1 trillion today, placing the country among top-five largest economies by the 100th year of independence.
Read also: The dream of being a developed country in 2045: Jokowi's numbers in plain language
