Are There Jobs for Everyone? An Analysis of the Relationship between the Employment of Older and Younger Persons in Indonesia

Investment Rating - The report does not explicitly provide an investment rating for the industry analyzed Core Insights - The analysis indicates that an increase in the employment rate of older persons is significantly associated with an increase in the employment rate of youth and prime-aged persons in Indonesia, suggesting a positive relationship rather than a competitive one [2][17] - The findings support the notion that raising the retirement age can help address challenges faced by an aging society, emphasizing the importance of lifelong learning and reskilling for older workers [2][12] - The report highlights that the employment rate of older persons has increased significantly, with a notable rise of 8.3 percentage points for those aged 65 and older from 2016 to 2023 [22] Summary by Sections Introduction - Indonesia is transitioning into an aging society, with 7% of the population aged 65 or older in 2023, projected to rise to 15% by 2050 [7][11] - The government has begun raising the retirement age from 55 to 65 by 2043 to address income security and pension sustainability [12][14] Labor Market Overview - The employment rate for older persons aged 55 to 64 increased by 3.3 percentage points, while for those aged 65 and older, it rose by 8.3 percentage points between 2016 and 2023 [22] - The employment rate of youth aged 15 to 24 remains the lowest among all age groups, highlighting the need for policies that support youth employment [21] Literature Review - Research in high-income countries shows no adverse relationship between the employment of older and younger persons, with some studies indicating a positive correlation [46][47] - Similar findings are observed in developing countries, where increased employment of older persons correlates positively with the labor market outcomes of younger persons [47][49] Data and Methodology - The analysis utilizes data from the Indonesia Labour Force Survey (Sakernas) from 2016 to 2023, focusing on employment rates, unemployment rates, hours worked, and income across different age groups [54][56] Findings - Regression analysis reveals that a 1 percentage point increase in the employment rate of older persons is associated with a 0.4 percentage point increase in the employment rate of youth and a 0.7 percentage point increase for prime-aged persons [67] - The report concludes that the employment of older persons does not negatively impact the employment opportunities for younger persons, reinforcing the idea that both age groups can coexist in the labor market [17][66]