China Increases Retirement Age for First Time Since 1950s

For many years, China laborers have concluded their professional careers at comparatively young ages, specifically at 60 for men and as early as 50 for women.

A big change is around the corner now that the China government implemented the new law last Friday, providing a road map to increase the retirement in a pace of 15 years starting from January 1, the Diplomat news reported.

Whereas the current regulations allow for the retirement of men at 60 years of age in cities and women at ages 50 or 55 years depending on their work categories, the newly developed standards will increase male retirement to 63 and female retirement progressively to 55 and 58 years.

China is changing its early retirement age.

These measures received approval from the nation’s highest legislative authority, following indications from a significant Communist Party body in July. The legislation proposes raising the minimum employment duration for pension eligibility from 15 to 20 years by 2030.

The proposed changes offer flexibility in retirement age for individuals who have met the minimum required working duration.

This decade-long adjustment addresses China’s slowing economy and the challenges of an aging population and pension funding crisis.

The declaration has ignited extensive debate and criticism throughout Chinese social media platforms.

Certain users on social media expressed relief that the proposed changes were not more severe and allowed for some degree of flexibility. A popular Weibo comment stated, “I have no objections as long as we can choose to retire or not,” garnering thousands of endorsements.

Conversely, others expressed dissatisfaction regarding the potential postponement of pension access and the prospect of additional years of employment. Concerns arose about this policy’s impact on China’s challenging job market, especially with persistently high unemployment rates among young individuals.

China Economic and Demographic challenges

One user noted, “Delayed retirements mean you can’t access your pension until 63, but not everyone will have jobs until then!”

Recent reports from Chinese state media have praised the expected changes as a critical and essential reform for a dated system, emphasizing that the current policy has been in effect since the 1950s, a time when both life expectancies and educational attainment were significantly lower.

Demographer Yuan Xin noted this week that state media reported the retirement policy framework has remained unchanged for 73 years. He emphasized that since the 1978 reforms, significant transformations have occurred in demographics, the economy, and the social landscape.

Yuan, the deputy head of the China Population Association and a demographer at Nankai University in Tianjin, stated that the current retirement age is significantly out of alignment with the present “national realities” and the evolving economic and social landscape of the future.

The current retirement ages in China are comparatively lower than those in several leading economies. As of 2022, the average standard retirement ages in countries belonging to the Organization for Economic Co-operation and Development (OECD) were recorded at 63.6 years for women and 64.4 years for men.

Various nations have faced challenges in addressing the retirement age. In 2023, millions protested in France over the government’s plan to raise the retirement age from 62 to 64. The U.S. is also considering retirement reform, raising the age and offering Social Security incentives for delaying benefits.

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The recent changes are a response to the growing concerns of China’s leadership regarding the nation’s demographic issues. Economists warn the developing country may face “aging before wealth,” experiencing aging challenges before achieving economic prosperity.

The population in China has been shrinking for two continuous years. This year, in 2023, it experienced the lowest birth rate since Communist China was established back in 1949. Despite reversing the “one-child policy” in 2016, government measures to boost births among young couples have yet to succeed.

More than 20% of the population is 60 years and above, with 297 million seniors recorded by the end of last year.

China has witnessed a population decline in the last two years. By 2023, the birth rate had reached an all-time low since Communist China came into establishment in 1949. This trend should have reversed after the 2016 abolition of the “one-child policy” and government efforts to support young families.

Over 20% of the population is aged 60+, with 297 million seniors recorded by year-end.

Demographers predict those aged 65+ will comprise 30% of the population between 2030 and 2035, per state media. Experts anticipate that over 40% of the population will be elderly by the mid-21st century, resulting in a “super-aged society.”

The government aims to enhance elderly care services and promote private sector involvement in the “silver economy.”

There is greater focus on the pension system’s ability to address challenges posed by a declining workforce and increasing elderly population.

A 2019 report estimated China’s pension fund may deplete by 2035, worsened by strict pandemic controls draining local government finances.

In early last year, hundreds of retirees protested in major cities due to significant cuts to their medical benefits. Suspecting that local governments were tapping their personal accounts to make up shortfall in the state pension fund.

In the post-pandemic period, the working population faces overwhelming job challenges due to government-imposed restrictions on various industries.

In July, the unemployment rate was 17.1% for non-student 16-24 year-olds and 6.5% for 25-29 year-olds.

Employers increasingly hesitate to hire as economic conditions worsen, with many tech applicants over 35 facing blatant age discrimination.

The new rules encourage the state to promote employment and entrepreneurial opportunities for young people and provide better job options for older workers. Additionally, they aim to raise awareness and prevent age-based employment discrimination through dedicated programs.