IDENTIFICATION OF LOCAL LABOR MARKET IN THE CONTEXT OF DEMOGRAPHIC DIVIDEND IN INDONESIA’S URBAN AREAS

Demographic dividend has essential relationship with the economic performance, and it can be a source of both opportunities and challenges in terms of economic growth. Moreover, the demographic transition has causal effect in labor market and society. Meanwhile, Indonesia has a demographic dividend and follows the digital era, but in the labor market in Indonesia low educated workforce dominates that will facing several challenges. Therefore, this study identifies the problems of urban labor market in Indonesia, assesses the current policies and prospect of new policy related to labor in cities. The study conducted is based on data obtained from many professional reports and studies carried out by government institutions, enterprises, consortia, journals, and previous research, systemized and calculated by author, as well as literature related to this research. The result showed the significant effect of demographic factors in forming labor policies and the labor market in Indonesia. However, to harness the benefits of demographic dividend and a labor surplus, there is a need for significant investment in enhancing the capabilities, skills, and education of the workforce. In current labor structure in Indonesia only 10 % of employees have high education. Hence, the urban areas are facing the poverty and high disparity caused by the low educated labor that migrate to urban for getting high salary.