China delays retirement age by up to five years, infuriating millions
China will raise the retirement age for the first time since 1978, a move that could stem a decline in the labour force but risk angering workers.
The government has endorsed a plan to delay retirement for employees by as long as five years, Xinhua News Agency reported. Men will now retire at 63 instead of 60. Women will retire at 55 instead of 50 for ordinary workers, and 58 instead of 55 for those in white-collar jobs.
China’s population shrank by 2 million people last year. With fewer babies comes the question: who will pay the taxes to look after the elderly?Credit: Bloomberg
The change will be based on people’s birthdays, will be gradually introduced over 15 years starting in January, and make more people work longer. This is to address the challenges of an ageing population, by ensuring there are enough workers to pay the taxes to provide pensions, although it risks adding to public discontent.
“The timeline of raising the retirement age is pretty gradual. Policymakers probably have taken into account the potential negative impact and calibrated that carefully,” said Michelle Lam, Greater China economist at Societe Generale SA.
Shares of Chinese companies providing health and elderly care jumped on the news.
“People may face more health problems if the retirement age is raised. And the pressure of supporting parents may require more elderly care institutions to share the burden,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co.
China’s retirement age is among the world’s lowest despite significantly increased life expectancy over the decades. A bigger tax base and delayed access to benefits will relieve the pressure on the government to fund pensions as the elderly population rapidly expands.
An elderly patient receives an intravenous drip in the hallway of the emergency ward in Beijing. People over 65 are expected to make up 30 per cent of the population by around 2035.Credit: AP
The hike is aimed at “adapting to the new situation of demographic development in China, and fully developing and utilising human resources,” according to the decision by the Standing Committee of the National People’s Congress.
The approval followed a July announcement by the ruling Communist Party that the retirement age would rise in a “voluntary, flexible manner”. Previous efforts to raise the threshold had failed in the face of public opposition.
“Are you asking me, when I’m 60, to compete with young people for jobs?”
Weibo user
“This is a big step towards countering a key drag on long-term growth — a shrinking working-age population. But it won’t turn the tide. Our long-term projections, which already factor in a bump in the retirement age, point to growth going down to about 1 per cent by 2050,” said Eric Zhu, Bloomberg economist.
The Friday decision has left some people fuming over working into an older age, as well as those who fear greater competition in the job market.
“Are you asking me, when I’m 60, to compete with young people for jobs?” a Weibo user said on the X-like social media platform, where the news was the top trending item and garnered more than 530 million views in a few hours.
Some also complained about employers’ discrimination against older job candidates, a problem that the government has long vowed to address.
Authorities acknowledged the potential short-term pressure on the job market at a press briefing on Friday. Li Zhong, vice minister at the Ministry of Human Resources and Social Security, said the gradual pace of the change should lead to a “muted” effect on youth employment.
As China’s life expectancy has risen, delaying retirement has become more important to offset the demographic challenges from its decades-long enforcement of a one-child policy, which left a generation of single children supporting a large elderly population. Today, the average Chinese lives to 78, a huge increase on 66, which was the norm four decades ago, when the one-child policy was in its infancy.
People aged 65 and older are expected to make up 30 per cent of the population by around 2035 from 14.2 per cent in 2021, according to a report by state broadcaster CCTV. Authorities’ efforts to encourage births have so far done little to reverse the demographic shift, with birth rate falling to a record low last year.
“When I was born they said there were too many. When I gave birth they said there were too few. When I wanted to work they said I was too old. And when I retire they say I’m too young,” another Weibo user said.
Bloomberg