Comparison between labour force of india and indonesia

By: Amey Joshi (h12065) Mandar pawde (h12085) Mridul kakar (h12088) Nikhil Abhishek (h12091)

Comparison between Labor force of India and Indonesia

As India fails to deliver on its promise of growth, a smaller Asian country Indonesia, finds itself in a position to lure investors away from the third largest economy in the region with higher stock market returns, better fiscal management and lower inflation. As per the report of Goldman Sachs, India might be at risk of losing its position I to Indonesia in BRICS.
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While the two economies arent similar in terms of size, with Indias population of 1.2 billion and Indonesias at 240 million, the countries share many similarities, leading to comparisons. Both have a burgeoning consumer base and are democracies with an investment grade rating. Both the countries enjoy the benefits of demographic dividend, and therefore: This paper makes an attempt to compare the labor force between the two countries so as to make ourselves a bit aware of our competitor.

1. We start by comparing the labor productivity of the two countries 2

Labor force by Occupation in 2010 India

Labor force: 478.3 million Labor force - by occupation: Agriculture: 52% Services: 34% Industry: 14% Unemployment rate: 10.8%

Indonesia
Labor force: 116.5 million Labor force - by occupation: Agriculture: 38.3% Services: 48.9% Industry: 12.8% Unemployment rate: 7.1%

GDP Contribution by Labor Force in 2010 India Indonesia

Agriculture 18.1% Services 55.6% Industry 26.3% Agriculture 16.5% Services 37.1% Industry46.4%

Labor Productivity India

Agriculture 18.1/52 = 0.35 Services 55.6/34 = 1.63 Industry 26.3/14 = 1.88

Indonesia
Agriculture 16.5/38.3 = 0.43 Services 37.1/48.9 = 0.76 Industry46.4/12.8 = 3.63

It can be seen from the above data that the Indian labor force has far higher productivity in the services sector while the Indonesian labor force outsmarts India in the industrial sector. The boom in the mining sector of Indonesia which employs close to 30% of the total labor force in industry is the primary reason behind Indonesias high labor productivity.
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http://www.cnbc.com/id/47423993/Will_Indonesia_Replace_India_in_the_BRICs

Economywatch.com

2. Worker Protection: In Indonesia and India, permission of government is required when dismissing a worker. Therefore both of these countries have mechanisms that make it impossible to undertake dismissals easily. 3. % of high school and university graduates in labor force3
30 25 20 15 10 5 0 India Indonesia High school graduate or higher University graduate or higher

Better quality of manpower available to Indonesia and therefore a probable lucrative investment destination

4.Changes in minimum wages (monthly basis) US$

100 80 60 40 20 0 India Indonesia 2009 2010

Higher wages are being paid to labor in Indonesia leading to better position of Indonesia in Happiness Index (14) as compared to India (32) (Source :Wikipedia)

5. Labor participation Rate: Labor force participation rate is the proportion of population ages 15 and older that is economically active: all people who supply labor for production of goods and services during a specific period. (Source: World Bank Report 2010)
100 50 0 Male Female India Indonesia

Higher proportion among females ensures work diversity which again gives Indonesia a competitive advantage

Conclusion: India and Indonesia enjoy certain similarities in terms of high pool of talented workforce and a progressive democratic government which makes both of them lucrative destinations for foreign investment.Both economies have large domestic markets that helped shield them from global economic slowdown and global trade contractWhile India surpasses Indonesia in terms of cost, Indonesia seems to have an advantage in terms of work-force diversity and quality of manpower.

Political-economic similarities between India and Indonesia would foster Indian FDI into Indonesia, as Indian investors are used to challenges in a young democracy.
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Labor Survey Report by JETRO (Japan External Trade Organization) Overseas Research Department