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Human Capital Management Strategy :

Responding Indonesias Demographic Dividend

Amira Nadia Sawitri , Ria Andarini Putri , Risna Dwi Kartika
1 2 3

Airlangga University, Indonesia 1,2,3

amira.nadia.sawitri-2014@feb.unair.ac.id 1

ria.andarini-13@feb.unair.ac.id 2

risna.dwi-13@feb.unair.ac.id 3

Abstract: Being the fourth most populous country in the world is an advantage Indonesia should benefit from.
The United Nations even projected there will be a population of 300 millions in Indonesia in 2030, with an
increase in the working ages, meaning there will be an abundance of workforce which can help the economy to
grow even more rapidly. But in order to achieve that, Indonesia has to be more than just willing, but determined to
improve the quality of its people by investing more in the development program.

Keywords: Demographic dividend, workforce, human capital management, growth

In 2015, Indonesia had a population of 257 millions, which made it the fourth most populous
country in the world. Even better, the United Nations projected that Indonesia will have a population of
300 millions. The increase will be taking place, mostly (30 millions) in densely populated island of
Java. These projections have an important highlight which is the number of younger working ages (15
- 29 years old) will be increasing, yet, the higher increase will be in the working mature ages (30 - 64
years old), meaning Indonesia will be on the peak of having an abundant human capital resources
which lead to an inherent advantage to produce high levels of per capita income. (Mason, 2005) Yet,
Indonesia is still facing some challenges to overcome in order to benefit from the demographic

This research is conducted through qualitative method and analysis is based on the
demographic dividend phenomenon in Indonesia.

Findings and Argument

Demographic dividend means more workers, especially those who are in productive
ages group which lead to more incomes, more savings, more earning per capita, and not to
mention, growth. That rapidly expanding population can increase human and intellectual
capital and furnish expanding market, leading to economic growth (Kelley and Schmidt,
1996). This demographic change is correlated with fertility declines (United Nations, 2012),
this type of transition attributes to more females participation in the workforce (Bailey, 2006).
Indonesia is in a great shape to accelerate efforts to benefit from demographic
dividend by investing more in young people especially when it comes to education and
empowering them. Countries in the same region, South East Asia region, such as Malaysia,
Singapore and Thailand have invested in assuring the quality of education on health system
in their countries. Because, demographic dividend will only be beneficial if educated and
skilled young people can find decent jobs, thus there will be a decrease in unemployment.
Indonesia may as well establish an integrated Human Capital Management (HCM) as
a means of supporting the young people to get to assistance they need to excel more in this
demographic advantage The HCM is defined as a process of acquiring, training, managing
and retaining people for them to contribute effectively in the processes of an organization, in
this case, a country. HCM views individuals as valuable assets or intellectual capitals and
one day will become indispensible resource in the future and can be as contributive as they
can be to help their country grow.

Indonesia needs to engage on investment which supports the acceleration of skill and talent of
the young people, by establishing an integrated Human Capital Management (HCM) system. This will
help accommodate the young people with facilities that can assist them to develop their skill and
knowledge, to be applied in the future. Thus, they can be the main powerhouse and a determinant
regarding to economic and social development of Indonesia.

[1] Bailey, M.J. 2006. More Power to the Pill : The Impact of Contraceptive Freedom on
Womens Life Cycle Labor Supply, Quarterly Journal of Economics, 121 : 289 - 320

[2] Hayes, Adrian. 2015. Taking Advantage of the Demographic Dividend in Indonesia : A Brief
Introduction to Theory and Practice. UNFPA.

[3] Mason, Andrew (2007) : Demographic Transitions and Demographic Dividends in Developed and
Developing Countries. Proceedings of the United Nations Expert Group Meeting on Social and
Economic Implications of Changing Age Structure, Mexico City, 31 August 2 September 2005.
New York : United Nations

[4] UN Population Division, 2012. World Population Prospects : The 2012 Revision. New York : United
Nations Population Division