China will "gradually raise" its retirement age for the first time since the 1950s, as the country confronts an ageing population and a dwindling pension budget. The top legislative body on Friday approved proposals to raise the statutory retirement age from 50 to 55 for women in blue-collar jobs, and from 55 to 58 for females in white-collar jobs. Men will see an increase from 60 to 63.
China's current retirement ages are among the lowest in the world. According to the plan passed on Friday, the change will set in from 1 January 2025, with the respective retirement ages raised every few months over the next 15 years, said Chinese state media. Retiring before the statutory age will not be allowed, state news agency Xinhua reported, although people can delay their retirement by no more than three years.
Starting 2030, employees will also have to make more contributions to the social security system in order to receive pensions. By 2039, they would have to clock 20 years of contributions to access their pensions.
The state-run Chinese Academy of Social Sciences said in 2019 that the country's main state pension fund will run out of money by 2035 - and that was an estimate before the Covid-19 pandemic, which hit China's economy hard.
The plan to raise retirement ages and adjust the pension policy was based on "a comprehensive assessment of the average life expectancy, health conditions, the population structure, the level of education and workforce supply in China," Xinhua reported.
But the announcement has drawn some scepticism and discontent on the Chinese internet. "In the next 10 years, there will be another bill that will delay retirement until we are 80," one user wrote on a Chinese social media site Weibo. "What a miserable year! Middle-aged workers are faced with pay cuts and raised retirement ages. Those who are unemployed find it increasingly difficult to get jobs," another chimed in. Others said they had anticipated the announcement. "This was expected, there isn't much to discuss.
"Men in most European countries retire when they are 65 or 67, while women do at 60. This is going to be the trend in our country as well," one Weibo user said.
China's huge population has fallen for a second consecutive year in 2023 as its birth rate continues to decline. Meanwhile, its average life expectancy has risen to 78.2 years, officials said earlier this year. According to the World Health Organization, almost a third of China's population - about 402 million people - will be aged over 60 by 2040, up from 254 million in 2019.
Why China is Raising the Retirement Age
A slowing economy, shrinking government benefits and a decades-long one-child policy have created a creeping demographic crisis in China. China's pension pot is running dry and the country is running out of time to build enough of a fund to care for the growing number of elderly. Over the next decade, about 300 million people, who are currently aged 50 to 60, are set to leave the Chinese workforce. This is the country's largest age group, nearly equivalent to the size of the US population.
The Impact of the Policy
The decision has sparked debate and concern across Chinese social media, with some expressing anxieties about job security and the impact on an already challenging job market. Others see the move as a necessary measure to address the country's demographic crisis and ensure a sustainable pension system for the future.
A Look at Global Trends
The move is not unique to China, with other countries like France and the US also grappling with similar challenges. France saw major protests in 2023 in response to a government attempt to raise the retirement age from 62 to 64, while the US has been debating retirement reform and gradually increasing the retirement age, with Social Security incentives in place for retirees who delay taking benefits until age 70.
China's Demographic Challenge: A Growing Concern
China's population has shrunk for the past two years, and it 2023 it recorded its lowest birth rate since the founding of Communist China in 1949, despite a reversal of the country's long-standing "one-child policy" from 2016 and government-led efforts to incentivize more young couples to have children. China's elderly now account for more than 20% of the population, according to a report earlier this month from the Ministry of Civil Affairs, which said about 297 million were aged 60 and above by the end of last year.
Demographers cited in state media have said that, between 2030 and 2035, the elderly population will make up 30% of the total population. That is likely to increase to more than 40% of the population by the middle of this century – making China a "super-aged society."
The Pressure on the Pension System
The rising number of elderly people is putting enormous pressure on China's pension system. A 2019 report from the Chinese Academy of Social Sciences, a top government think tank, forecast that China's state pension fund would run dry by 2035 because of its dwindling workforce. Years of strict pandemic-related restrictions, which have shrunk the coffers of local governments, could make the pension shortfall even more pronounced.
A Balancing Act: Economic Growth vs. Social Security
The new policy highlights the delicate balancing act that China faces between economic growth and social security. The government is trying to find a way to support the growing number of elderly people while also maintaining a strong and competitive workforce. However, the new policy could put further strain on the job market, especially for young people who are already facing high unemployment rates.
The Future of China's Workforce
The policy will likely face challenges as it is implemented, and the government will need to address concerns about job security and age discrimination. It will also need to invest in programs and policies that support both young people and older workers to ensure a smooth transition in the workforce.
The Road Ahead: A Challenging Journey
China's decision to raise its retirement age is a significant step in addressing the country's demographic challenge, but it is just the beginning of a long and complex journey. The government will need to carefully monitor the impact of the policy and make adjustments as needed to ensure a sustainable and equitable future for its citizens.
