Amber Phillips
Updated on: October 11, 2024 6:20 am GMT
China is set to raise the retirement age for its workers as early as next year, a significant policy shift aimed at addressing the challenges of a shrinking population and an aging workforce. The announcement was made by the Standing Committee of the National People’s Congress, the country’s top legislative body, indicating a proactive response to demographic pressures that have increasingly heightened over the past few decades.
Details of the Policy Change
The new policy will gradually raise the retirement age over a period of 15 years. For men, the retirement age will extend to 63 years, while for women it will vary between 55 to 58 years depending on their specific professions. Currently, men retire at 60, and women retire at 50 in blue-collar jobs and 55 in white-collar positions. This change marks a significant shift from retirement ages established during the 1950s, a time when life expectancy was substantially lower, around 40 years.
Starting January 2024, the changes will be rolled out based on individuals’ birthdates. For instance, a man born in January 1971 will be eligible to retire at 61 years and seven months, while one born in May of the same year can retire at 61 years and eight months. The policy aims to help sustain the public pension system amid the increasing number of retirees in China.
Addressing Demographic Challenges
Experts emphasize that this policy adjustment is long overdue due to shifting demographics. As of the end of 2023, around 300 million people in China are over the age of 60, and projections estimate this number will grow to 400 million by 2035, exceeding the total population of the United States. These demographic shifts are not unique to China; other countries, including the U.S., are grappling with similar issues regarding pension sustainability amid an aging population.
Yanzhong Huang, a senior fellow at the Council on Foreign Relations, identified the challenge as part of a broader global concern. “This is happening everywhere,” Huang commented, noting that in China, the scale of the elderly population compounds the issue significantly.
The Chinese Academy of Social Sciences has previously warned that the public pension fund could run out of funds by 2035 if no action is taken, underscoring the urgency of the retirement age increase.
The Impact of Low Birth Rates
In addition to an aging population, China is facing declining birth rates. In 2022, for the first time, the country’s population recorded a drop of 850,000 individuals compared to the previous year, indicating a shift from population growth to a decline. The trend has continued into 2023, with another decrease of approximately 2 million people. Younger generations tend to be less inclined to have children, often citing high living costs as a primary reason.
This shrinking workforce means that the burden of supporting retiree pensions will increasingly fall on a smaller pool of younger workers. The dependency ratio, which measures the number of elder dependents to working-age individuals, stood at 21.8% in 2022. This means approximately five workers support each retiree. Experts warn this ratio is likely to worsen, placing even more pressure on the working population.
Public Reactions to the Policy
As the policy moves closer to implementation, reactions among the population appear mixed. Some individuals view the raise in retirement age positively. A 52-year-old Beijing resident, who will now retire at age 61 instead of 60, expressed support for the new policy. “I view this as a good thing because our society is getting older, and in developed countries, the retirement age is higher,” he remarked.
Conversely, others have expressed disappointment at the prospect of a later retirement. Li Bin, a 35-year-old event planner, described her sadness about losing potential leisure time. “It’s three years less of playtime. I had originally planned to travel around after retirement,” she said. However, she acknowledged this adjustment is an improvement, as the retirement age increase for women in white-collar jobs is only three years.
Social media reactions to the policy have also been largely censored, indicating potential public apprehension and dissent. Of the thousands of comments on an official news post concerning the announcement, only a few dozen were visible, suggesting many opinions were suppressed.
Looking Forward
As China embarks on this significant policy shift, the larger implications for the economy and the workforce remain to be thoroughly evaluated. The impacts of gradually raising the retirement age will unfold over the coming years, potentially reshaping the dynamics of the labor market and intergenerational economic relationships within Chinese society.
This change is needed because the population is changing, but it will bring some challenges for people in China. One big challenge will be making sure the pension system stays strong as the country goes through this change.
