China’s retirement age is among the world’s lowest. The threshold for workers has been kept at 60 for men and between 50 and 55 for women. - Reuters
BEIJING: China will raise the retirement age for the first time since 1978, a move likely to slow a decline in the labour force but anger workers already wrestling with a slowing economy.
The country’s top lawmakers endorsed a plan to gradually delay retirement for employees, Xinhua news agency reported Friday (Sept 13). Men’s retirement age will increase from 60 to 63, while women’s will rise from 50 and 55 to 55 and 58, according to the report. This change will take place over 15 years, starting on Jan 1, 2025.
"Governments at all levels should actively respond to the ageng of the population, encourage and support the employment and entrepreneurship of workers,” according to the decision by the Standing Committee of the National People’s Congress.
The country’s top legislative body also called on officials to protect workers’ rights and improve elderly care, and it empowered the State Council, China’s cabinet, to adjust the measures if necessary.
The approval followed a July announcement by the ruling Communist Party that the retirement age will rise in a "voluntary, flexible manner.” Allowing more people to work longer will counter demographic headwinds weighing on the world’s second-largest economy, although it risks adding to public discontent amid an economic slowdown.
"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.
The document added that starting 2030, China’s workers will also have to pay longer into their pension accounts before they’re eligible to receive their retirement payout. The requirement will be gradually raised from 15 to 20 years.
The top legislature’s discussion of the plan earlier this week triggered an outpouring of anger on social media, where many complained about a sluggish job market. Some users also pointed out how employers often discriminate against older candidates, a problem that the government last month vowed to address.
China’s retirement age is among the world’s lowest despite significantly increased life expectancy. Since at least the 1970s, the threshold for workers has been kept at 60 for men and between 50 and 55 for women. The change will see women’s retirement age rise to 55 for ordinary workers and 58 for those in management positions.
A bigger tax base and delayed access to benefits will relieve the pressure on the government to fund pensions as the population rapidly ages, with birth rate falling to a record last year.
"The sustainability of the pension system may be the main consideration behind the move,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered. "The impact on the economy in the short term should be limited as the hike is gradual.”
People aged 65 and older are expected to make up 30% of the population by around 2035 from 14.2% in 2021, according to a report by state broadcaster CCTV on Tuesday. - Bloomberg
