DEMOGRAPHIC VARIABLES AND ITS SIGNIFICANCE FOR BUSINESS ACTIVITIES

by Tadjuddin Noer Effendi

Introduction
In a study business environment, demographic variables are important to understand and to be consider by some one which concerned and involved in business activities. One of the reasons is that almost all private and public sector has the ultimate aim for producing and delivering some kind of good or service to people. It would appear axiomatic, therefore, that necessary and fundamental preliminary of efficient and affective production and delivery of good and services is a sound and detailed knowledge of the population which being by business or government agency (Hugo, 1991). Other reason is that knowledge of the population has a potentiality to provide basic data and information that can be use for helping to strengthen business activities and in magnetizing investors. In addition, a characteristic of population and their change over time able to present general pictures of a potential market. For example, a country having a big population with a high economic status that has purchasing power could develop an extra-ordinary market expansion. While a country having a big population but high proportion of population having a low income as indicated by a high incidence of poverty, a lower level of education and health may not be attractive to investor since have limitation for market expansion. A big population characterized by unequal distribution also can hinder development process and led to hinder the business activities. As we know that about 60% of Indonesia population live in Java and the rest are spreading out in other islands. To fulfill the need of big population, a state has to invest a lot of fund to develop Java than other island. As a result, infrastructure and other public facilities are more develop in Java than outer Java. The available of infrastructures have easy access for investors to get facilities in developing their activities. Not surprisingly, therefore, investors tend to be attracted to invest more in Java than outer Java. Another reason for investors being more willing to invest in Java is that the abundant of laborers are available in Java in comparison to outer Java. Demographic variable such as age structures could determine the nature of business activities. The high proportion of younger age structure can give a potentiality to other investor to develop their business related to younger age structures needed, such as school, social facilities etc. However, when fertility rates decline and the

proportion of adult population decrease led to the potential market will change. For example, the change of population structures of Yogyakarta and Central Java toward aging population as life of expectancy increase and decrease number of adult population because or fertility decline subsequently have to force the government implementing policy to close down or to merger many primary schools. Several years after, the secondary schools are also finding difficulty to get new pupils. This gives an illustration on how the change of population structure could determine the public policy. In contrary, the state has to spend a lot of fund to build new schools to serve young adult population need in the region where fertility rates still high. In some cases in order to make available its population need, the state have to provide more budget and grant. Moreover, more funds have to endow with subsidize to the region that has high poverty incidence or low quality of population. This perspective assumes that demographic aspect; especially population growth is place an independent variable. Other perspective assumes that demographic aspect could place as a dependent variable. This means that business activities could be influenced demographic variable. However, this could be occurring in a particular area or country. For instance in Batam before business activities (industries) are concentrated there, the number and the population growth was very low. Since business activities are located there, the rate of population growth increased significantly because abundant of migrants from other area migrated to Batam. In 1990, the number of population was about 106.667 and in 1990 increase to 434.299 and in 2010 increase close to 949.775. This means after industrial development, the population growth of Batam a year in period 1990-2010 vary between 5-10%. Rapid population growth is a result of inmigration as an attraction of the concentration of business activities (industries) there. However, the bulk of migrants have created new problems in Batam, such as crime, housing problem and environment degradation. This in-migration also led to population structure (age) of Batam are more productive and young potential people. This means that business activities can be a magnet for people (labor) and lead to determine population aspect, especially population growth and age structures. To sum up, theoretically the relationship between demography and business activities can be analysis from two perspectives.
1. Demographic variables place as an independent variable Demographic variables Number of population Population growth and density Population structures (Age, education, employment etc) Business activities

Economic and social status

2. Demographic variables place as a dependent variables Business activities Industries Services Agriculture Demographic variables Number of population Population structures

From the previous discussion, it can be learned that demographic information could help some one to make decision about type, equality, and quantity for their business. Without those data and information the business person may be find difficulty in developing their activities. However, business activities can determine population aspects as well. This gives ample reasons why business person needs to study demographic aspects. Accordingly, this articles discusses several basic demographic data and information such a number, distribution and population density, population structure (age, gender, education and employment) also their change and to evaluate its implications on business.

NUMBERS, DISTRIBUTION AND POPULATION DENSITY

From the number of Indonesians population in 2010 (237.6 million), it lies in fourth place after RRC (1,346million), India (1,198 million) and United State (315 million). This large number of population has potential to attract investor because there would be big market opportunities and an abundant amount of potential labor. Of course, this would help the development process and stimulated economic growth. Indonesia is one of destination countries for industrial expansion of industrial countries (Japan, South Korea, Cina, Hongkong, United States). Investment in several business activities has stimulated economic growth ranging between 5-8% per year. This economic growth has led to open opportunities for other business activities. However, this investment has created many problems cause of the unequal of quality and population distribution. Regions have large population such as Java may can attract more investors while other regions such as Papua, Maluku less attractive for them. Table 1 indicates the comparison of the population in Java and outside Java in the year 2010. Table 1 indicates about 60% of total population of Indonesia of live in Java, an island with its area covers only 7% of the total land area of the country. Especially, Jakarta population density in 2010 is about 14,440 persons per square kilometers (see Table 1). The high of population density such as Jakarta is a place has been more attractive for doing business both trade and service. However, it has been probably beyond the limit of carrying capacity of the environment to support the need of its population. This limitation has an implication, especially the cost in developing business, especially manufacturing, in Jakarta. It is more costly in Jakarta comparison to

Table 1 Population Numbers by Gender, Distribution, Density, and Provinces in 2010

places out side of Jakarta. The reason is that in developing business activities there is a need take into account the impact upon the environment. Environment has to protect and to minimize the impact of business on declining the quality environment of livelihood. This is important to consider in maintaining the sustainable development. To achieve this, an effort to prevent the degradation of environment we need to develop a plan and policy in controlling the impact of business activities on quality of environment. Java, Bali and Sumatra (so called Western Indonesia) have numbers of population about 78.8% of Indonesia population. The rest about 21.2% of population are distributing in Kalimantan, Sulawesi, and other islands (so called Eastern Indonesia). Papua with its area cover 19.3% of the total inhabited only have 1.5% of Indonesian population. This unequal population distribution has an important implication on business development. The eastern of Indonesia is less attractive to investor has led to the business activities not developed in a good way in the region in comparison to Java and the rest of Western Indonesia. For example Maluku and Papua have the population density only 12 persons per square meters. In contrast Java has population density 1,055 persons per square meters. The different may have effects on development process, the development process is faster in Java and the rest of western than eastern Indonesia and this has an implication on inequality of welfare. This has implication on business activities. Demographic data presents in Table 1 could be use for an investment planning as well. Java has a population density about 1055 per square kilometers could be use as an indicator that labor and market are available there. However, it has limitation because land for industries has been limited so that land price is relatively expensive in comparison to other areas where population density is low. Another problem needs to be considering in areas having high population densities is for preventing environmental degradation and pollution. This need more fund so that the cost higher in comparison to the lower one. Labor cost may be lower but cost for environmental management in order to support sustainable environment may be more expensive. Those data can help the businessman to consider other alternatives in decision for their investment.

POPULATION GROWTH
Population growth can be use as basic information for business investment. They not only assisting in understanding the existing condition but it also can give us information about trend and prospect of population in the future. Table 2 presents the population growth rate by province of Indonesia in period 1980-1990, 1990-2000 and 2000-2010. In average before 2000 population growth has decreased but in the last decade it has increased from 1.35 % in 2000 to 1.49% in 2010. Data in Table 2

indicates that there is a significant provincial variation in the growth rate of population in period 1990-2010, ranging from 0.37% of Central Java and 5.46% of West Papua. Those data also presents that in several provinces the population growth in the past 10 years under 1%, such as in Central Java (0.37%), East Java (0.76%) and West Kalimantan (0.91%). West Java and Banten located surrounding Jakarta, its population growth about 1.89 % and 2.79% above national growth rate. It seems that the district of Jabotabek as a greater of Jakarta Metropolitan has been received more in-migrants from surrounding areas and peoples move out of Jakarta. This fact offered an indication that to develop business (retail and service) may be better to invest outside Jakarta than in center of Jakarta. Provinces outside Java that had experiences in the decline of population growth were Riau, South Sumatera, Bengkulu, West Nusa Tenggara, West and Central Kalimantan, North Sulawesi, Southeast Sulawesi. There have been several aspects causing the decline of population growth. The decline of population growth in Java provinces are partly causing of fertility and influx of out-migration of provinces the population growth in the past 10 years under 1%, such as in Central Java, and East Java. Whereas, West Java and Banten are located surrounding Jakarta, its population growth above national growth rate. It seems that the district of the region especially Jabotabek receive more in-migrant since many manufactures operated there. West and Central Kalimantan, the decrease of population since the large number of population moved out to other areas cause of social disturbance (riot and social conflict) that occurred in 1998. Fertility and mortality decline in several provinces of Java indicates that there is social change toward small family in response to family planning in the last 10 or 20 years ago. This would be effect on the change of the age structure of population, and as a consequent, the age structure will change toward aging population. This will be discussing in the next section (age structures section). The decline of fertility rate in few provinces have caused by some factors namely: Social change, especially female education has increased and female has initiated to enter the labor market of public sector in order to get wages. This brings change in social (life) behavior of women, especially toward marriage. They tend to delay marriage since they have to finish education for the sake or their career development in work place. For the marriage women, planning spacing of pregnancy is becoming a norm and the preference to have children depend on the family economic condition. Two children have already been a norm in young family. in several provinces

Table 2 Population Growth by Province in periods 1961-2010

The awareness in birth control has spread out and has already been accepted in the society.

The first age marriage has increased significantly, especially for young generations followed with young eligible couples.

Small family norm are starting to be accepted and children are seen to be an economic burden (not as fortune any more).

Service towards the effort to controlling and delaying pregnancy has available and easy to find.

The decline of mortality rate is cause from several factors namely: Prevention for infection and spread disease has improved significantly. People are already free from spread disease. Primary health care had developed and spread out so that people have easy access to find the health service. Access to service for pregnancy, childbirth, and modern facilities for mother, baby and child are already easy to find. Incidence for poverty tended to decline due to family health nutrition had been improving and nutrition for child under five years has improved significantly as well. Life expectancy for all age has increased. Data in Table 2 also indicates that several provinces their population growth have increased at above level of national growth rate. These include provinces of Riau, Riau Island, East Kalimantan, Central Kalimantan, and Papua. This fact can use as an indicator that some business activities may have attracted people in-migrated to those provinces as an effort looking for job to those provinces. For Central Kalimantan, Southeast Sulawesi, and Papua beside in migration there is might be in association with the high fertility as result of low quality of human resources cause of the high proportion of poverty. By analyzing the population growth, we have an idea that there is open opportunity in those provinces to do business activities. However, the low level of living condition, low family income as indicated by high poverty rate, the market might is quite limited leading the prospect for business also limited. In Riau and East Kalimantan population growth have increased may be caused by influx of in-migration (young peoples) looking for job there. These areas have experienced rapid development activities since there are many investors investing in industries and other business activities. For example in Batam, Riau Island, the bulk of investment since 2000 lead to the economic growth of Batam has reached approximately 7% a year. Batam City in the period of 1990-2000 has population growth

approximately 15.63% and in 2000-2010 decreasing to about 7,7% a years, but this still about 4 times of national population growth. The industries activities have attract more labor migrated to this region. Free zone policy has attracted investors to invest in varied of business activities there. This has created a lot of job opportunities and business activities both formal and informal sector to support the need of its population. This has a magnet to attract more productive of young people looking for job there. It is not surprisingly; therefore, the age structures of Batam tend to dominate by productive age groups. This of course has implication on business activities opportunities in order to meet the young adult needs. However, the massive in-migration has created a negative impact on Batam environment. Subsequently, most of in migrants established their houses by cutting the jungle illegally cause of the degradation of environment quality due to spread out squatter in reservoir zone. One of the impacts is that the reduced the supply of cleaning water for consumption. In addition, Batam labor market (industries) is not able to absorb all of young in-migrants. Most of them have to wait for a while in getting job as their aspiration. The other had find difficulty entering labor market caused of them not able to meet the need of labor market. Faced with these problems then forcing some of them to become unemployed. Crimes and social problems come out and this phenomenon would affect the future business atmosphere.

POPULATION STRUCTURES Age

Population growth caused by fertility, mortality, in and out migration would effects the age structures of population. To understand the relationships between population growth and the age of population structure we used data population structures by age. Since 1980 Indonesia had experienced the decrease of fertility and mortality has led to decreases of population growth (see Table 2) and changed the age structures of population. This change has effects on demographic structures in which so called demographic transition: the age of population structures change towards young population. Proportion population of age 0 14 groups reduced followed by increased of age 15 24, 25 64 groups. Old peoples (age >65) tend to increased but it relatively slower compare to young people. The change of population structures indicates in Figures 1. The change of age structures has an implication on nature of business. The young population would have deferent preferences over old population. An implication from the decline of population growth caused by fertility decline is that the school age of primary school has decline significantly in few provinces (namely Central Java, East

Java and Yogyakarta) in recent years. For example, in Yogyakarta caused of number student for grade 1 reduced significantly, the state has applied a policy to merger and close down the primary school that is lack of new pupils (grade 1). In contrary, the needs of young and old peoples tend to increase in turn have create other business opportunities. It should be notes, however, in the long run the increase of old people will negatively affects on economic growth. The increased of old people will results in lower saving, less spending and decreased productivity and economic growth (Basri, 2012: 30).

Figure 1 Indonesia Population by Age Group in 1970-2010

60 50 40
Percentage

Age groups
>65 25-64 15-24 0-14

30 20 10 0 1970 1980 1990 2000 2010

Source: BPS, based on 1970-2010 Population Census, Jakarta

These aggregate shifts of age structures are very important for business activities because many needs for good and services are strongly concentrated in particular age groups. This will cause corresponding variations in the level and type demand for particular goods and service. For example, the increase of age 15-65 group will effect on productive of working age. This in turn will stimulate economic growth. The reasons for this lies on the increase of age 15-65 groups will reduced dependency ratio. This means that the expenditures have to spend for unproductive age groups then can be saved in turn would increase ability of saving and investment. In addition, the purchasing power of productive of age 15-64 groups will increase expenditure for secondary and tertiary needs led to increase of demand and business opportunities. Modigliani and Brumberg (quoted in Basri, 2012: 30) noted that countries with young population tend to have higher level of consumption than countries with older population. Young people at the start of their careers buy more cars, houses, furniture, and other household goods, whereas older are groups consume less and save more. I

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predict that level of consumption will remain strong in Indonesia. Consumer-oriented companies can therefore expect to do well. With consumption currently accounting for 65 per cent of the economy, high demand should continue to stimulate economic growth. However, it should be noted that in the future years dependency ratio of old population will increase and in turn affect the decreased of productivity and economic growth. This could happen since the ageing population will results in lower saving and less spending. Table 3 shows summary of dependency and economic support ratios, selected Asian Countries in 2000, 2025 and 2050. It can be seen that decreased in child dependency ratio in 2020 and 2050 and increased old dependency ratio led to decrease economic ratio.
Table 3 Summary of dependency and economic ratios, selected Asian Countries, 2000, 2025 and 2050
Total dependency ratio Countries Japan South Korea Indonesia Philippines Thailand Bangladesh India 2000 2025 2050 Child dependency ratio 2000 2025 2050 Old dependency ratio 2000 2025 2050 Economic support ratio 2000 2025 2050 0.637 0.582 0.545 0.647 0.622 0.564 0.683 0.695 0.652 0.677 0.672 0.649 0.787 0.728 0.653 0.753 0.761 0.728 0.641 0.638 0.601

0.468 0.673 0.838 0.393 0.477 0.678 0.546 0.456 0.573 0.676 0.458 0.521 0.450 0.453 0.660 0.622 0.428 0.523 0.620 0.459 0.531

0.217 0.226 0.254 0.250 0.447 0.583 0.299 0.252 0.270 0.094 0.226 0.417 0.473 0.333 0.313 0.073 0.123 0.260 0.615 0.353 0.305 0.061 0.105 0.216 0.366 0.274 0.278 0.084 0.178 0.382 0.569 0.344 0.309 0.052 0.084 0.213 0.540 0.336 0.300 0.081 0.123 0.232

Source: Mason, Lee and Russo (quoted in Basri, 2012, p.310)

It is not easy to find any data refer to Indonesia that can use to show the relationship between expenditure and age structures. To illustrate those relationships we use examples Australian household expenditure and American expenditure by various broad categories according to the age structures see Figure 2 and Figure 3. Figure 2 indicates that the expenditures of household for recreation tend to increased gradually up to age groups 45-55 and then decrease gradually. This means that age groups below 33-35 are potentially for recreation market. The market for clothing, medical care, housing and food could be identification as well. This pattern similar to the united state as indicated in figure 3. By analyzing relationships between age structure and household expenditure, we able to identified demand (market) for various goods and service. It is important to note that age structures not only main factor shaping demand for a product, but it can be used to understand the potential market. This means that one of the areas where demographic analysis may be most helpful to business person is that it can help in identification the location of potential market. In

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addition, it can help in understanding the behavior of the diverse consumer groups that make up markets for goods and services both for existing situation and for the future.

Figure 2 Australia: Average Weekly Household Expenditure on Selected Items by Age, 1988
120 100 80 60 40 20 0 24 and under 25-34 35-44 45-54 55-64 65+ age

housing

food

recreation

clothing

medical care

Source: Hugo, Graeme, 1981, p. 8

Figure 3 United States: Expenditure on Selected Items by Age, 1988

2000

1600

1200

800

400

0 less than 25 25-34 35-44 45-54 55-64 65-74 75+ age

rent

food away from home

education

health care

Source: Hugo, Graeme, 1981, p. 9

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Education Structure and level education of population is important data and information and
they can be use for helping in developing business activity. Data and information on population education structure and level of a region could give a picture of skill formation of the labors that is needed for supporting business activities. The region has low level of education maybe less attractive for business activities which needs support of skilled labors. For business, activities that do not really on unskilled labors the low level of education structure would not be a problem but the level of wage would still be in consideration. Usually educated skill labors require different wages from unskilled labors. Business activities that are trying and seeking to find out low wage levels tend to look for regions have low level of education. Education level of population in normal condition could also be used as an indicator for understanding economic status of population. Regions with relatively have high proportion of educated people tend to have high incomes. Hence, it could also be used as proxy purchasing power of population. The life style and the need of population are influencing by education level. Based on those reasons, the need for goods and service for educated and uneducated people are different. As an example, the computer business could develop well in Yogyakarta because the proportion of highly educated populations is higher but computer business would not develop in regions where the proportion of educated population is low such in Papua or Central Kalimantan. In the period between 1973 and 1991, the state has spending large investment for school building program. The out come is impressive, primary enrolment gradually increase close to 100%. As a result, there was a steady declining in illiteracy, between 1961 and - 2003 fell from 44% to 10% for men and from 69% to 16% for female. In addition, in this period also experienced a rise in secondary enrolment from 10% to 40%. Despite a massive effort carried out by the state, in term of education level, Indonesia lagged far behind the neighboring countries such as the Philippines, Malaysia, and Singapore. More than half of the population above 10 years old is only graduated from primary school. Graduated high education (tertiary education) are lower about less than 2% in 1990 and increased to about 6% in 2010, except Jakarta, Yogyakarta, Bali, East Kalimantan, Riau Island (see Table 4). Low level of education to some extent has implication on the quality of human resources led to low of purchasing power since they involved in low wages of employment (informal sector). In Eastern Indonesia, the proportion of population had graduated from secondary and tertiary not

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Table 4 Education Structures of Population by Province in 1990 and 2010 Education (%) 1990* Education (%) 2010** Provinces Primary Ache North Sumatra West Sumatra Riau Jambi South Sumatra Bengkulu Lampung Bangka Belitung Kepulauan Riau DKI Jakarta West Java Central Java Yogyakarta East Java Banten Bali West NusaTenggara East Nusa Tenggara West Kalimantan Central Kalimantan South Kalimantan East Kalimantan North Sulawesi Central Sulawesi South Sulawesi Southeast Sulawesi West Sulawesi Gorontalo Maluku Maluku Utara West Papua Papua INDONESIA 73.2 69.8 72.1 75.8 78.3 79.1 76.8 81.7 51.9 80.9 83.0 67.7 81.2 75.6 84.5 86.2 83.7 76.3 78.2 69.2 71.2 78.0 76.7 77.8 74.9 79.6 73.4 Secondary 25.4 28.7 26.1 22.8 20.5 19.8 21.5 17.5 42.8 17.8 16.0 29.4 17.6 22.4 14.5 12.8 15.3 22.6 20.6 28.5 26.9 20.6 21.5 20.8 23.7 19,0 22.3 Tertiary 1.4 1.5 1.8 1.4 1.2 1.1 1.6 0.8 5.3 1.3 1.0 2.9 1.2 2.0 1.0 1.0 1.0 1.1 1.2 2.3 1.9 1.1 1.8 1.4 1.4 1.4 1.6 Primary 47.9 46.5 50.9 50.9 56.6 58.3 53.7 56.7 60.6 39.1 30.8 57.7 61.6 42.6 60.3 51.7 50.9 64.4 68.0 64.4 57.7 58.6 46.4 48.1 57.7 56.2 66.1 63.7 63.1 49.3 54.1 45.1 63.6 55.7 Secondary 44.2 47.6 42.3 43.5 38.7 36.4 39.8 39.8 34.8 52.9 55.3 37.2 33.5 47.0 34.9 41.6 39.9 30.8 27.4 31.7 36.3 35.7 46.3 45.0 36.3 36.4 29.8 31.7 32.1 43.7 40.2 45.6 31.3 38.3 Tertiary 7.9 5.9 6.8 5.6 5.2 5.3 6.5 4.0 4.6 8.0 13.9 5.8 4.9 10.4 4.8 7.7 9.2 4.4 4.6 3.9 6.0 5.7 7.3 6.9 6.2 7.4 4.1 4.6 4.8 7.0 5.l7 9.3 5.1 6.0

Source: *BPS, 1992, Population of Indonesia: Result of Census 1990 , Seri S2, p.141 **BPS, 2011, Welfare Statistics 2010, Jakarta, p.89

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much difference from rest of Indonesia. This may have influenced why investor may not interesting to invest their capital in some provinces of Indonesia. Not only skill labors are difficult to find out but also the market could not develop cause of lower purchasing power. Data from Table 4 also shows that within 30 years, from 1990 to 2010, the change of education level of population relatively significant. The proportions of primary educated populations are decreasing followed by increasing of graduates of secondary school but the proportions of population that have graduated from tertiary education are still low (below 10%), although in some provinces show significant increase. This reflects that although in several provinces the improvement of welfare but has not any significant change in education level of population. From the business point of view, those changes have not yet give the possibility for market expansion and may be is still difficult for developing business activities. May be this is one of the obstacles in tracking investors to invest their capital in several provinces, especially in the eastern provinces of Indonesia.

Employment
Besides education as discussed in the previous section, labor force and employment data could also be use as an indicator to examine the social and economic transformation process of a region. Labor force participation rate could show populations participation in labor market. The higher labor participation rates means the working age populations who are in endeavor to be involved in economic activities are high. Population growth, the expansion of education, the willingness of female to enter labor market, and the type of employment in a region could determine labor force participation in the labor market. Regions which is still depend much on agricultural sector or informal sector as a source of their income, the labor force participation rate are significantly higher compared to regions where the economy rely on manufacturing sectors. Understanding these data and information, businessperson could examine the changes that will happen and could develop a plan or model for predictions on labor force supply and market prospect for business development or expansion. In period 1990-2010, the labor force participation in all provinces has experienced a significant increase (see Table 5): from below 60% rise to a level above 60%. This indicates that the flow of working age population in entering labor market is increasing. Population growth that occurred few decades ago has contributed to this increase. Babies born 20 years ago are starting to enter the labor market. This increase of labor participation rate might also cause of the increase of female labor force entering the public sectors a long with the increase their education. However, not all of the

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Table 5 Labor Force Participation Rate and Open Unemployment by provinces 1990 and 2010 1990* 2010** Provinces Aceh North Sumatra West Sumatra Riau Jambi South Sumatra Bengkulu Lampung Bangka Belitung Riau Island DKI Jakarta West Java Central Java Yogyakarta East Java Banten Bali West Nusa Tenggara East Nusa Tenggara West Kalimantan Central Kalimantan South Kalimantan East Kalimantan North Sulawesi Central Sulawesi South Sulawesi Southeast Sulawesi Gorontalo West Sulawesi Maluku North Maluku West Papua Papua INDONESIA Labor Force Participation Rate (%) 53,2 53,9 51,0 53,2 56,6 54,9 59,5 56,8 48,7 49,7 58,6 63,4 57,3 61,7 59,2 63,2 61,2 58,7 57,8 53,6 51,3 54,5 44,1 53,5 49,6 60,9 Open Unemployment Rate (%) 2,8 3,2 3,0 2,8 1,9 2,9 1,8 1,9 7,1 4,1 2,6 2,5 2,7 2,0 2,2 0,8 1,9 1,8 3,3 4,3 4,3 2,7 4,8 3,3 3,4 3,1 Labor Force Participation Rate (%) 63.2 69.5 66.4 63.7 65.8 70.2 71.9 67.9 66.5 68.8 67.8 62.4 70.6 69.8 69.1 65.3 77.4 66.6 72.8 73.2 69.9 71.3 66.4 63.3 69.2 64.1 71.9 64.4 71.5 66.5 65.1 69.3 80.9 67.7 Open Unemployment Rate (%) 8.3 7.4 6.9 8.7 5.9 6.6 4.6 5.6 4.6 6.9 11.0 10.3 6.2 5.7 4.3 13.7 3.1 5.3 3.3 4.6 4.1 5.2 10.1 9.6 5.2 8.4 4.6 5.2 4.6 10.0 6.0 7.7 3.5 7.1

Source: *BPS, 1992, Populations of Indonesia: Result of Census 1990, Jakarta, Seri S2, p.267 **BPS, 2011, Welfare Indicators 2010, Jakarta, p. 201

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working age populations acquire employment as their aspiration. Most of them are continuing looking for jobs owing to the competition to enter labor market more tight in recent years. As the results, open unemployment has been increasing more than twice in period 1990-2010. This is an indication that labor market was not able to absorb labor force. There is tendency that more young educated who just graduated from secondary and tertiary schools were waiting for a moment looking for job as their aspiration. Not surprisingly, therefore, that open unemployment rate relatively higher for young educated (age 20-24) than other age groups (see Figure 4). What is implication of higher open unemployment rate for business activities? An implication is that the criminal rate tend to higher so that for developing of business activities in the place has higher open unemployment rate we have to careful and probably we need more social cost than in region have lower one.
Figure 4 Open Unemployment Rate by Age Groups 15-24 and 25-65 in Urban dan Rural, Indonesia, Year 2010

Rural Urban Indonesia 0 5 10 15 20 25

Age groups
Total Age 25-65 Age 15-24
Percentage

Source : BPS, 2011, Laborer Situation, Agust 2010, Jakarta, p. 25, 26, and 27

Access to job opportunities in formal sectors, especially modern sector (industries) became even more difficult to be entering by labor force. Facing with this situations more labor has seek to find prosperity in service sector, namely informal sector. Many workers of the formal sector that has discharged or received trouble in putting an effort in formal sector also attempt to enter the informal sector. Table 6 indicates that within 30 years (1990-2010) labor force employing in agricultures have decreased significantly and following an increase in industries and service sector. However, more labor force involved in service sector than industries. This reflects that many laborer forces whose have shifted from agriculture sector had entered service sector. The proportion of labor force employed in industry is higher (more than one third) reported in provinces of Java, except Jakarta (see Table 6). Out side Java only three provinces Bangka Belitung, Riau Island (Batam) and East Kalimantan are higher

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Table 6
Percentage of Population 10 Years and over Worked During The previous Week by Industry and Province in 1990 and 2011 Province 1990 (%)* 2011 (%)** Agriculture Industry Service Agriculture Industry Service Ache North Sumatra West Sumatra Riau Jambi South Sumatra Bengkulu Lampung Bangka Belitung Riau Island DKI Jakarta West Java Central Java Yogyakarta East Java Banten Bali West NusaTenggara East Nusa Tenggara West Kalimantan Central Kalimantan South Kalimantan East Kalimantan North Sulawesi Central Sulawesi South Sulawesi Southeast Sulawesi Gorontalo West Sulawesi Maluku North Maluku 65.5 60.4 59.8 58.1 69.7 64.5 70.9 70.2 1.1 36.8 47.9 45.5 50.1 44.1 54.3 75.2 72.5 61.9 53.8 43.2 55.7 67.5 57.6 68.0 62.0 8.9 10.4 9.2 13.1 8.1 10.4 6.4 8.7 28.1 23.2 19.4 19.4 16.4 21.5 16.9 12.2 8.1 15.2 14.6 20.5 13.0 8.8 10.1 7.8 11.4 25.6 29.2 31.0 28.8 22.2 25.1 22.7 21.1 70.8 40.0 32.7 35.1 33.5 34.4 28.8 12.6 19.4 22.9 31.6 36.3 31.3 23.7 32.3 24.2 31.3 23.8 25.2 21.0 30.2 37.3 34.3 26.1 26.4 13.7 5.4 0.5 15.8 16.9 3.8 21.9 7.5 4.0 30.3 11.4 20.1 33.0 18.2 11.5 17.5 20.6 12.6 11.7 19.2 27.5 6.6 18.2 18.2 25.8 21.8 21.1 15.7 17.3 18.6 26.5 41.7 45.7 22.3 40.9 41.3 33.0 35.6 42.9 29.4 19.5 15.3 25.7 23.2 27.8 31.9 24.5 18.8 22.6 24.0 22.4 21.9 17.3 15.7 58.0 49.0 57.2 48.7 47.0 48.8 55.3 47.1 44.6 48.9 77.9 43.3 41.8 63.2 42.5 49.6 66.6 50.5 73.3 54.2 43.8 54.0 56.6 48.0 60.6 64.8 64.3 58.4 50.6 76.1 66.1 61.3 68.3

West Papua 14.6 24.1 Papua 71.9 6.9 21.2 9.9 21.8 Source: *BPS, 1992, Population of Indonesia: Result of Census 1990, Jakarta, Seri S2, p.312 **BPS, 2011, Laborer Situation in Indonesia, August 2011, Jakarta, p.92

proportion employed in industry. Abundant of labor, good infrastructures and close to market, Java is favorable for investing in industry. The phenomenon of labors transformation in some provinces since 1990 was shifted from agriculture to service sector. As we know that the last 10 years many job opportunities have increased along the spread out of modern market such as super market, mini market and modern service such as laundry, cell phone and accessories, car and motor bike services, restaurants, hotels, houses, and other luxury goods (see Basri, 2012: 33). This has been stimulating by increasing of middle class as an implication of bonus demography

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as indicated in the previous discussion. The World Bank reports that the proportion of the Indonesian population with per capita expenditure of between $2 and $20 per day increased from 37.7 per cent in 2003 to 56.5 per cent in 2010 (quote in Basri, 201: 32). These groups by the World Bank define as middle incomes. This has positive effect on business activities and in turn will effects on purchasing power of the society. CONCLUSIONS Demography data and information could contribution for helping the business person to develop planning in their business activities. It is important to bear in mind that the relationship between demographic variables and business is not linear relationships. Their relationships only could happen in a normal condition. One important to do before we are analyzing demographic variables for business activities we need a set of latest, validity and accurate data demography. It is also need to check what instrument and the method were using in data collecting.

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REFERENCES

Basri. M.Chatib, 2012, Indonesias Role in The World Economy: Sitting on The Fence, in Anthony Reid (eds), Indonesia Rising: The Repositioning of Asias Third Giant, Singapore, Institute of Southeast Asian Studies, p.28-48 BPS, 1992, Population of Indonesia: Result of Census 1990, Jakarta, Seri S2 BPS, 2011, Laborer Situation in Indonesia, August 2011, Jakarta BPS, 2011, Welfare Indicators 2010, Jakarta BPS, 2011, Welfare Statistics 2010, Jakarta BPS, Bappenas, UNDP, 2004, National Human Development Report 2004, The Economic of Democracy: Financing Human Development in Indonesia, Jakarta ILO, 1998, Employment Challenges of the Indonesian Economic Crisis, Jakarta, UNDP Hugo, Graeme, 1991, What population Studies Can Do For Business, Journal Of The Australian Population Association, Vol. 8, No 1, p. 1-22 Johnson, Colin, 1997, The Indonesian Economy: Survey Recent Development, BIES, 33 (2) Manning, Chris, 1998, Indonesian Labor in Transition: An East Asian Success Story, Melbourne and Cambridge University Press World Bank, 1995, Workers in an integrating World, New York, Oxford University Press

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