Lawmakers Review Proposal to Raise Retirement Age in Aging China

By Farah Master

HONG KONG (Reuters) – This week, China’s top legislative body evaluated an official proposal to postpone the retirement age, one of the lowest globally. This marks a significant move towards reforming long-standing labor laws and addressing economic challenges associated with a declining workforce.

In July, the ruling Communist Party announced plans to gradually increase the retirement age. Currently, men can retire at 60, which is around six years earlier than in most developed countries, while the retirement age for women in white-collar jobs is set at 55, and 50 for those in manufacturing roles.

Extending working years could alleviate strain on pension budgets, as many provinces are already experiencing significant deficits. It would also mean delaying pension disbursements and requiring older employees to remain in their positions for longer, a change that may not be universally welcomed.

Following reports from the official Xinhua news agency about discussions among National People’s Congress members in Beijing, the subject gained considerable traction on Chinese social media. Many users voiced concerns over the increasing competition for jobs amidst a scarcity of opportunities.

Mo Rong, Director of the Chinese Academy of Labour and Social Sciences, stated in the People’s Daily, "It is an inevitable choice for China to adapt to the new normal of population development."

The urgency for reform is underscored by rising life expectancy in China, which increased from approximately 44 years in 1960 to 78 years by 2021, projected to surpass 80 years by 2050. Concurrently, the workforce available to support the elderly is diminishing.

National health authorities anticipate that the population aged 60 and over will increase from 280 million to over 400 million by 2035, a number equivalent to the entire current populations of the UK and the US combined.

Currently, there are five workers for every retiree in China, a ratio that has halved from a decade ago and is trending towards four-to-one by 2030, and two-to-one by 2050.

Data from the finance ministry reveals that 11 of China’s 31 provincial jurisdictions are grappling with pension budget deficits, and predictions from the state-run Chinese Academy of Sciences suggest the pension system may be depleted by 2035.

JOB CONCERNS

Draft proposals to alter the retirement age are anticipated to be shared for public input in the coming weeks.

On social media platform Weibo, over 100,000 users commented on an Xinhua post, raising alarms about the worsening job market for both young and older adults, as well as concerns over delayed pension payments forcing seniors to continue working longer.

One Weibo user lamented, "Young people cannot find jobs, middle-aged people fear layoffs, and now there’s the added issue that the elderly can’t retire."

Experts like Stuart Gietel-Basten, a professor of Social Science and Public Policy at Hong Kong’s University of Science and Technology, believe it is unlikely that raising the retirement age will lead to increased competition for the same roles between younger and older workers. "Older individuals will likely retain blue-collar and white-collar jobs, which differ from those suited for entry-level positions," he explained.

In contrast, countries like Japan and South Korea only allow pension access at ages 65 and 63, respectively, largely due to their longer life expectancies.

However, introducing changes to the retirement age in China is likely to be more complex, given the disparities between provinces and the rural-urban divide.

"When considering life expectancy alone, it suggests that the retirement age should be raised. However, it’s crucial that this is implemented fairly, especially for migrant or gig workers who may not have a consistent work history," Gietel-Basten added.