China is looking to make major retirement age change due to shrinking workforce

China has one of the world’s lowest retirement ages for men and women

Chinese policymakers are reviewing plans to delay the retirement age of state employees as the urgency grows over a shrinking workforce within a rapidly ageing population.

China has one of the world’s lowest retirement ages among major economies at 60 for men, 55 for white-collar women, and 50 for women who work in factories. The policy has remained unchanged since the 1950s.

On Tuesday, the National People’s Congress discussed a draft law to “gradually raise the statutory retirement age”, the Xinhua News Agency reported.

The review of the draft law was held at the 11th meeting of China‘s Standing Committee in Beijing after a resolution was adopted in the third plenary session of the Communist Party in July to tackle the ageing population and a declining birth rate.

The government has long pushed its citizens to work longer but has refrained from policy implementation fearing a pushback from people.

However, the urgency to tackle the early retirement age – six years below men in most developed economies – has increased as the median age in China has risen to almost 40, making a gradual rise in the last 54 years when it was still 20.

China’s working-age population is 61 per cent of the total population, down from 66 per cent in 2016 (AFP via Getty Images)

The country’s working-age population – the number of people between the ages 16 and 59 – plunged to 865 million last year, 61 per cent of the total population, according to official statistics.

It has marked a five per cent downfall from 2016 when it was 907 million or 66 per cent of the total population.

Meanwhile, the life expectancy in China has also almost doubled, rising to 78 years by 2021 from about 44 years in 1960, and is projected to exceed 80 years by 2050.

According to the UN estimates, China is projected to have 31 per cent of its population to be 65 years or older by 2050. By 2100, the country would have almost half of its population, 46 per cent older than 65.

“Gradual implementation of the policy means that the scale of the labor force released to society in the short term will not be too large, and the overall impact on the job market will be limited,” Yuan Xin, vice president of the China Population Association was quoted as saying by Xinhua.

Once the most populated country in the world, China has grappled with its falling population for two consecutive years and is expected to continue falling for decades, piling pressure on a rapidly ageing population.

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

The move is also expected to abate pressure on pension budgets with many provinces already reeling from large deficits. The country has already cut down on medical benefits for some pensioners.

Eleven of China’s 31 provincial-level jurisdictions are running pension budget deficits, according to finance ministry data. The state-run Chinese Academy of Sciences sees the pension system running out of money by 2035.