Without Energy, the Demographic Bonus is Merely a Statistic

Indonesia frequently discusses the demographic bonus as if a large productive population will automatically generate economic growth. We calculate the number of working-age citizens, the growth of the middle class, and the potential of the domestic market.

However, one question is rarely placed at the centre of the conversation: with what will they become productive? A worker requires electricity to work, industry requires energy to create jobs, cities require energy to move, data centres require electricity to sustain the digital economy, and almost every modern economic activity requires energy in one form or another.

Therefore, the demographic bonus is not merely a matter of population numbers. It is a matter of a nation’s capacity to provide the energy, infrastructure, and economic systems that enable those people to be productive. Without energy, the demographic bonus is just a statistic.

Every generation in human history has grown alongside different energy systems. Agrarian societies relied heavily on human labour, animals, water, and biomass. The Industrial Revolution then introduced coal as an energy source capable of drastically transforming human production capabilities.

Oil and gas subsequently enabled the birth of mass transport, modern manufacturing, petrochemicals, and global trade on an unprecedented scale. Today’s generation lives in a system increasingly dependent on electricity.

And the next generation will likely live in an economy that is far more digital, automated, and based on artificial intelligence. This shift demonstrates that energy does not merely follow economic development; energy helps determine the form of the economy that each generation can build.

Consequently, Indonesia’s demographic bonus should not be read solely through population pyramid graphs. While the number of the working-age population is important, those numbers only become a strength if the people within them have access to jobs, education, technology, transport, healthcare, housing, and infrastructure that allow them to generate value.

Almost all of these require energy. A modern farmer needs electricity for irrigation and processing. A factory needs electricity to run machinery. A hospital requires energy that must never be interrupted.

Schools need electricity and digital connectivity. Public transport requires energy. Even a worker operating from home via a laptop remains dependent on the power grid and telecommunications networks. Thus, energy truly sits behind almost every activity that makes a population productive.

This is where a very close link exists between demography and energy, which requires greater attention in national development policy. As the working-age population increases, the demand for economic activity also rises. More people mean more homes, more travel, more workplaces, more consumption, more industry, and more services. All of this creates energy demand.

But that relationship does not stop at consumption. If energy is available in sufficient, affordable, and reliable quantities, it can enhance human productivity. Technology can be utilised more widely, machines can replace unproductive physical labour, industries can expand, small businesses can increase capacity, and digital connectivity can open access to wider markets. Energy transforms human numbers into economic capacity.

Conversely, if population growth is not accompanied by growth in energy and economic capacity, the demographic bonus could turn into a burden. Millions of working-age people require jobs. Jobs require economic activity. Economic activity requires industry and investment. Industry requires energy.

If energy costs are too high, supply is unreliable, or energy infrastructure is unavailable in regions where the workforce and industry are developing, then the economy’s ability to absorb labour will be limited. In such a situation, the problem is not that Indonesia has too many productive people; the problem is that we have not yet built sufficient productive capacity to utilise them.

The experience of Asian nations provides an important lesson. Japan, South Korea, Taiwan, and later China experienced phases of economic transformation when large-scale labour met industrialisation, infrastructure, and increased productivity.

Energy was a fundamental part of that transformation. Factories required electricity. Ports required energy. Railways required energy. The steel, petrochemical, electronics, and manufacturing industries required energy on a massive scale. Labour growth became an economic force when there was a system in place that allowed them to enter increasingly productive production activities.

Indonesia is now in a different phase, but the principle remains the same. We are entering an era where the jobs of the future will not only be in conventional factories. The digital economy, artificial intelligence, data centres, high-tech manufacturing, electric vehicles, the battery industry, and various forms of modern services will become increasingly important parts of the economy.

However, almost all of these share one common foundation: stable, competitive, and sufficiently available electricity. This means Indonesia’s demographic bonus will occur alongside the electrification of the economy.

The consequences are significant. If Indonesia’s young generation is to be a generation that…