Time to Transform the Younger Generation into a Strategic National Asset

National productivity will remain stagnant if a large portion of the young workforce remains trapped in low-wage, low-productivity jobs. According to the 2025 Inter-Census Population Survey (SUPAS), Generation Z accounts for 24.93 per cent of Indonesia’s total population, Millennials represent 24.34 per cent, and the post-Generation Z cohort makes up 19.65 per cent. This means that roughly 69 per cent of the Indonesian population belongs to the three youngest generations, a demographic composition unprecedented in Indonesia’s modern history.

While many refer to this condition as a demographic bonus, Indonesia is actually facing something more specific and decisive: a ‘generational bonus’. This is not merely an abundance of the working-age population, but the dominance of a generation raised in the era of the digital economy, automation, and artificial intelligence. The critical question is no longer whether Indonesia has enough labour to drive economic growth, but whether it can transform this youthful dominance into productivity, innovation, and prosperity. History shows that a generational bonus can be a leap towards progress, but it can also become a source of instability if mismanaged.

In population economics literature, the demographic dividend refers to the economic growth opportunity that arises when the proportion of the working-age population is larger than the non-working-age population. However, experts have long warned that this opportunity does not manifest automatically. David Bloom, a Harvard University economist who has extensively researched the demographic dividend, states that changes in age structure are merely an opportunity. The impact on economic growth depends heavily on investments in education, health, job creation, and the quality of institutions.

The experiences of various nations demonstrate this clearly. South Korea, Singapore, and China successfully utilised their demographic dividends through massive investments in education and industrialisation. Conversely, several developing nations failed to maximise benefits because they were unable to provide sufficient employment for their young workforce. This lesson is highly relevant for Indonesia. While the large number of young people is a valuable developmental asset, this capital will yield nothing without the right strategy.