A new study, conducted by the Organisation for Economic Co-operation and Development (OESO), reveals that Indonesia is among the nations that are the least affected by population ageing. By 2050, for every Indonesian who is aged above 65 years, there are 4.3 Indonesians in the productive age (20-64 years) according to the study.

Japan, Italy, Portugal, the Netherlands, Germany and Finland - on the other hand - are having the biggest problems related to ageing populations and this situation is not expected to change by 2050. For example, the OESO estimates that in Japan there will be one person aged above 65 years for every 1.3 people in the working age. Having relatively few citizens in the productive age is of course a major problem for the economy.

However, having a young population is not enough. A demographic bonus - like Indonesia currently has - can turn into a demographic disaster if the workforce is not able to get employment or develop necessary skills through education.

Read more: Analysis of the Indonesian Population

Moreover, for a country like Indonesia it is now the right time to prepare for a future in which the population is ageing. According to the World Bank, Indonesia's population will start ageing from the year 2040 onward, implying the start of lower labor-force participation and lower savings rates, as well as the likely possibility of slowing economic growth. Therefore, the Washington-based financial institution advises the Indonesian government not to wait too long with reforming the pension system. If Indonesia does not reform its pension system well before 2040, then it may cause severe poverty among the elderly.

Ageing Populations Across the World

Highest Proportion of Elderly Citizens:

Country 1975
Japan   7.9   2.2   1.3
Italy   4.6   2.6   1.4
Finland   5.5   2.9   2.1
Germany   3.8   2.9   1.7
Portugal   5.1   2.9   1.4

Lowest Proportion of Elderly Citizens:

Country 1975
Mexico  10.5   8.7   3.1
India  13.2  10.0   4.5
South Africa  12.3  11.1   5.6
Indonesia  12.6  11.4   4.3
Saudi Arabia  13.2  20.8   3.7

Source: OESO