The News
Chinese officials have begun a review into raising the country’s retirement age to combat twin crises: a rapidly shrinking workforce and a looming pension funds shortfall.
China has some of the lowest retirement ages in the world — 60 for men, and between 50 and 55 for women.
Life expectancy in China has dramatically increased in recent decades — it is set to almost double from 44 in 1960 to over 80 by 2050. Around 46% of its population will be over the age of 65 by 2100, according to United Nations’ estimates.
SIGNALS
Younger workers worry their job prospects will be affected
Plans to raise the retirement age in China have long been criticized by younger people in particular, who worry they will end up waiting longer for promotions if older workers remain in their roles longer, The Economist noted in 2021. Some 13.2% of 16-24 year-olds were unemployed according to figures published for June, and some analysts warn that postponing retirement could hurt their employment prospects further. Industry choices could make the difference, however: “It’s a different set of jobs that older people are going to be keeping on, blue collar and white collar jobs will be very different to entry level ones,” one expert told Reuters.
Immigration could help solve China’s demographic woes
Raising the retirement age won’t fix China’s underlying demographic problems, but immigration could help slow population decline, a sociologist argued in The Conversation — however, its leaders have shown historical reluctance to pursue that strategy, he added. Net migration to other countries with aging populations, like Japan for example, has been steadily increasing from a low base, with some positive results, a United Nations population expert told The New York Times.
China faces a looming pension deficit
As more of the population ages out of work, China’s pension system is under serious strain, and its funds will be depleted by 2035 if no action is taken, according to the Chinese Academy of Social Sciences. Part of the blame lies with China’s one-child policy, in place between 1980 and 2015, which has meant elderly people are less able to rely on children for financial support, the BBC noted. Aside from delaying retirement, some experts have suggested increasing employees’ 15-year minimum contributions period to align with international standards — closer to 30 years — and incentivising investment into private pensions accounts, Nikkei Asia wrote.