China’s top legislative body has approved a proposal to raise the country’s retirement age, the official Xinhua news agency said on Friday.
Overhaul Of Decades-Old Laws
This proposal accelerates an overhaul of decades-old laws to tackle the economic pressure of a shrinking workforce.
China’s retirement ages are currently amongst the lowest globally.
Need For Reform
The need for reform is urgent as life expectancy in China has risen to 78 years as of 2021 from about 44 years in 1960.
It is projected to exceed 80 years by 2050.
Working Population Shrinking
At the same time, the working population needed to support the elderly is shrinking.
Retirement Age For Men And Women
The retirement age will be raised for men to 63 years old from 60, while for women in white collar work it would be raised to 58 years from 55.
For women in blue collar work it will be adjusted to 55 from 50.
The changes are set to come into force on January 1, 2025.
Pension Budgets
Having people work for longer would ease pressure on pension budgets with many Chinese provinces already reeling from large deficits.
But delaying pension payouts and requiring older workers to stay at their jobs longer may not be welcomed by all of them.
Hundreds of thousands of people took to social media after Xinhua reported that China’s top lawmakers discussed the topic on September 10.
Many people expressed concern that there would be more job seekers chasing too few openings.
Benefits Of Raising The Retirement Age
Xiujian Peng, senior research fellow at the Centre of Policy Studies at Victoria University in Australia, spelt out the benefits of raising the retirement age.
Peng said that that this will help the government increase the labour force participation rate.
Furthermore, it will help to mitigate the adverse effects of population aging.
Impact Of The Move
Xing Zhaopeng, ANZ’s senior China strategist said the move would likely have “no impact on the short-term economy.
In the long run, it will help to avoid premature labor shortages and maintain stable productivity growth.”
(With Inputs From Reuters)
