Productivity Loss: Ill Health of Workforce in Indonesia Impact Economic Prospects

September 19, 20168:12 am1671 views

In Indonesia and other economically vibrant countries across the world, costs related to lost productivity as a result of health issues are significant and rising.

Research findings released by the U.S. Chamber of Commerce’s Global Initiative on Health and the Economy in a report titled, “Economic Costs of Absenteeism, Presenteeism and Early Retirement Due to Ill Health: A Focus on Indonesia,” sheds further light on the economic impact on Indonesia due to ill health of the productive workforce.

The study calculates that the Indonesian economy lost 6.5 percent of GDP in 2015, and projects losses of 7.2 percent by 2030, due to an aging workforce and the high burden of adult chronic disease.

Myron Brilliant, executive vice president and head of International Affairs at the U.S. Chamber says, “Rising incidences of non-communicable diseases like diabetes, cardiovascular disease and cancers are creating significant challenges to these nations. In order to succeed in achieving economic growth and prosperity, the public and private sectors must take action in partnership to promote health and workforce productivity.

The proportion of Indonesian workforce aged 50-64 years is projected by the ILO to increase to 24.3% by 2030, an increase of 4.6 percentage points compared with increases of 1.8 percentage points and 2.7 percentage points for the Philippines and Malaysia respectively. As its population ages it moves into age groups with higher levels of chronic disease.ill-health-workforce-in-indonesia

By 2030, the proportion of the work force in Indonesia aged 50-64 years is comparable to that of US and Australia and significantly above other developing countries, such as Malaysia and the Philippines. It is noteworthy that both the US and Australia will have a declining proportion in this age group over the period 2015 and 2030 as this cohort reaches into even higher age groups.

The economic costs arise largely because due to ill health, people aren’t able to work as much as they would like. They may either be sick and absent from work (absenteeism), present at work but not working at full capacity due to illness (presenteeism), or retired prematurely, say from aged 50-64 years due to ill health (early retirement due to ill health).

See: Indonesia to encourage protection of global migrant workers

Japan and Singapore is expected to have 58% and 53% respectively of their populations aged over 45 by 2030, the size of the increase is large compared with other countries in the APAC region.

Although Indonesia has much higher smoking rates than Malaysia and the Philippines, it suffers from a lower burden of disease across a range of conditions, most notably diabetes. Other diseases which carry a lower burden than these nearby neighbours include AIDs (particularly high in the Philippines), chronic obstructive pulmonary disease (COPD) and stroke.

Ill health prevents some people from working, and others are restricted in the amount of work they can undertake. In developed countries, such as the US and Australia, there are well developed systems for both recognising the impact of ill health on the ability to work and providing income support commensurate with the level of disability.

Most developing countries also have systems and processes for identifying and supporting those in needs arising from ill health, but they are more restrictive than those available in the developing countries.

It is clear that with time most of the developing and middle income countries will have an increasing proportion of their workforce entering the older age groups where the burden of NCDs is much higher.

Of the countries included in this study, Indonesia can expect to have a more rapidly ageing work force. Without greater attention to improved health behaviours, its work force will become less healthy and more subject to absenteeism, presenteeism and early retirement.

Also read: Top 5 Best Employers in Indonesia for 2016

Image credit: financialpost.com

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