China is set to raise its statutory retirement age, encouraging people to work longer as the country seeks to relieve growing pressure on its pension system.
Unchanged since the 1950s, the country’s retirement age is currently among the lowest in the world, at 60 for men, 55 for white-collar women and 50 for blue-collar women.
The new retirement age has not yet been confirmed, but reports in state-run media suggest it is likely to be raised to 65 years old for all citizens, gradually phased in over several years.
What is China doing?
The policy to gradually raise the retirement age was adopted in July during a top-level Communist Party Central Committee meeting known as the third plenum, with the reform expected to be completed by 2029.
“In line with the principle of voluntary participation with appropriate flexibility, we will advance reform to gradually raise the statutory retirement age in a prudent and orderly manner,” party authorities said.
A report released last year by the state-run Chinese Academy of Sciences noted that 65 years old “may be the final result after adjustment” of the policy.
The superpower has the largest social security system in the world, with about 1.05 billion people paying into, or receiving payments from, its national basic pension at the end of 2022.
However, its population of 1.4 billion people is declining and aging, in part due to the one-child policy implemented from 1980 to 2015.
These demographic factors are putting immense pressure on state pension budgets.
Why is it such an urgent issue?
The country had 297 million citizens aged 60 and older in 2023 and Chinese health authorities expect that to rise to more than 400 million by 2035.
On top of that, life expectancy in China has risen from 44 in 1960 to 78 in 2021 — and is projected to exceed 80 by 2050.
Most demographers and economists say that the current pension system, which relies on a workforce that is shrinking to pay the pensions of a growing number of retirees, is unsustainable and needs to be reformed.
It is mostly administered at a provincial level, and 11 of China’s 31 provincial jurisdictions are already running pension budget deficits.
Critically, the Chinese Academy of Sciences predicts that, under existing policies, the pension system will run out of money by 2035.
Chinese women have traditionally cared for their grandchildren after retirement. (Reuters: Tingshu Wang)
How has the idea been received?
The new policy has received a mixed response on Chinese social media.
Some say it is reasonable to raise the retirement age, arguing that those in Western countries retire later than people in China.
“The retirement age in Canada is 65 and the average life expectancy is over 80 years old,” said user Houdawang on the Red social media platform.
But others have expressed anger and anxiety at any potential change.
“Do [Western nations] have our work intensity? Do they also work ‘996’?” said a post.
“996” is a gruelling business culture that refers to working from 9am to 9pm, six days a week.
One reason women have traditionally retired earlier at 50 or 55 is because they were expected to take over caring duties for their grandchildren.
Some users online said they were worried about age discrimination and that they wouldn’t be employable in their 40s and 50s.
Several noted employers’ discriminatory hiring practices, including a widespread trend among companies to seek younger and cheaper workers that has become known as the “Curse of 35”.
Ms Yang, a woman who only gave her surname and lives in central China working in human resources, told the ABC her company did not consider job applications from “old people”.
“People about 30 years old are OK, but not older than 35,” she said.
Jobseekers aged over 35 have reported great difficulties finding employment in China. (Reuters: Tingshu Wang)
Emily, a Shanghai resident in her 40s who works in the legal profession and asked to use a pseudonym, told the ABC she was frustrated with the new reform proposal.
She said she was planning to retire at 50 but was worried about losing her job before then.
“Many people risk losing their jobs after 45,” she said.
“If we can only retire after 65, what should we do with the remaining 20 years?”
It’s left her concerned for her post-work financial prospects.
China has the largest social security system in the world. (Reuters: Jason Lee)
Why is it such a controversial idea?
Stuart Gietel-Basten, professor of social science and public policy at the Hong Kong University of Science and Technology, said pension reform always had the potential to cause a negative public reaction, no matter where it was proposed.
“Anywhere in the world, whether it’s in France, or even in Russia,” he said.
“Pension reform is one of the few things that brought people out on the streets against [Russian President Vladimir] Putin.
“It’s something which is never popular because pension reform is almost always negative for most people.
“It’s either work longer, pay more tax, get less money, or a combination of the three.”
People attend a job fair in Beijing in February 2024. (Reuters: Ellen Zhang)
Ms Yang, who was born in rural China, said she wasn’t worried about the new policy because she didn’t expect to live long enough to reach retirement.
“I don’t think I’m strong and healthy enough to live up to the retirement age,” she said.
Chinese citizens from rural areas have significantly worse health outcomes than urban people, including life expectancy.
The country’s urban-rural divide further complicated the formulation of pension policy, said Lauren Johnston from the University of Sydney’s China Studies Centre.
“Rural people are across almost every dimension worse-off than urban people and that applies especially to pensions since rural work has tended to be informal,” Dr Johnston said.
“In general, if you’re born in urban China, you’ve won China’s lottery.
“Being born in Beijing or Shanghai is like being born Swiss or Norwegian — but within China.
“It’s a dramatic and often inhumane inequality. But I doubt anyone’s going to bankrupt the nation or take on the urban elites to address it.”
Chinese pensions are based on an internal passport system known as “hukou”, which divides the population along urban-rural lines, creating vast differences in access to social services.
Monthly urban pensions range from roughly 3,000 yuan ($625) in less-developed provinces to about 6,000 yuan ($1,250) in Beijing and Shanghai. Rural pensions are meagre, with the minimum set at 123 yuan ($25) a month.
Dr Johnston said the urban-rural divide also shaped popular opinion towards the policy change.
“In urban China, you have people who want to keep working because they’re rich, they’re smart, they’ll be bored sitting around,” she said.
“But the problem is rural women do far more manual labour.
“They’ve been working with their hands and sometimes on their knees, probably since they were young teenagers if not younger.
“They want to retire … and so you have this clash of class interests.”
Life expectancy in China is projected to exceed 80 by 2050. (Reuters: Tingshu Wang)
Could immigration be the solution?
Last month, an article in The Conversation sparked debate among experts by suggesting that mass immigration, rather than raising the retirement age, could be the solution to defusing “China’s demographic time bomb”.
It proposed the “influx of a young immigrant workforce” to slow population decline and alleviate the negative economic impacts of an aging population.
But China analysts are sceptical.
Professor Gietel-Basten said if policymakers wanted to keep the labour force constant through migration, it would be “impossible” because “hundreds of millions of people” would have to move to China.
Another problem was that “people forget that migrants also get old”.
“So unless you’re going to kick them out as soon as they turn 60 or 65 … then all those migrants as they get older also contribute to the [old-age] support ratio as well.”
The professor emphasised that there could be a role for immigration in solving China’s population issues, but it would have to be “sector-specific” or focused on bringing talent back to the country.
“Bringing high net worth individuals back … and scientists and people like that,” he said.
Dr Johnston said the legacy of China’s one-child policy probably made the idea of mass migration a non-starter.
“This was an unbelievably challenging, and often very inhumane policy,” she said.
“A leading reason for the one-child policy was to try to elevate people’s living standards and to end hunger and poverty.
“The idea that you then, at the end of that policy implementation, you turn around and say we need to mass import people, I just don’t think that’s consistent.”
What other policies can they pursue?
Raising the retirement age is just one of the policy options open to the Chinese government to mitigate complications from an aging and declining population.
Some analysts have said that the threat of a demographic crisis to China’s society is overblown, and policymakers have been able to anticipate the population trajectory for years.
“It’s just the reality that we are facing and there’s no need to panic,” said Professor Gietel-Basten.
“It will be solved through lots and lots of different policies … there is no easy fix.
“Having more babies? No, it’s not going to fix it.
“Bringing in more people is not going to fix it, raising the retirement age is not going to fix it.”
Possible solutions could include investing in gerontechnology, which links technology to the needs of elderly people. (Reuters: Tingshu Wang)
The way that demographic issues will be solved, according to the Hong Kong-based professor, is by “joined-up policy” and looking at the problem “in a holistic way”.
He said investing in gerontechnology — which links technology to the needs of elderly people — could help.
“We could reinvent the nature of work in middle age and later life so it isn’t the same work, it isn’t the same kind of burden,” he said.
Some analysts said the threat of a demographic crisis to Chinese society is overblown. (Reuters: Tingshu Wang)
But many Chinese pensioners currently have low expectations for their retirement, according to Dr Johnston.
“Today’s pensioners have been conditioned to be cheap,” she said.
“They’ve been told their whole working life that China will be ‘old before rich’ and therefore when they’re old, China’s still going to be a developing country.
“If you look at the per capita income of today’s old people, they actually spent much of their life in a relatively poor country — so it’s probably not quite as shocking for them as it might seem to others.”
The China expert suggested the government may choose to emphasise a culture of volunteerism and mimic the “barefoot doctors” program of the early Chinese Communist Party reign.
In the 1960s, Mao Zedong sought to address a critical shortage of medics in rural areas by giving basic training to an army of village doctors, and sending them out to provide essential care.
Dr Johnston said she wondered if the Chinese government may similarly create a “kind of barefoot aged care” workforce.
“Most old people in China grew up using shared toilets, shared bathrooms, shower rooms that are open,” she said.
“For a lot of older Chinese, sure they might dream of the luxury nursing homes that a billionaire in China gets, but actually, a communal sort of ‘barefoot doctor’ aged care nursing home might not be that remote from the basics of what people need — especially of that generation.”
ABC/Reuters
