China will raise the retirement age for the first time since 1978, a move that could stem a decline in the labor force but risk angering workers already wrestling with a slowing economy.
Top lawmakers endorsed a plan to delay retirement for employees by as long as five years, Xinhua News Agency reported Sept. 13. Men will retire at 63 instead of 60. Women will retire at 55 instead of 50 for ordinary workers, and 58 instead of 55 for those in management positions.
The change will take place over 15 years starting January, and will allow more people to work longer. This could boost productivity to address the challenges of an aging population, although it risks adding to public discontent with the economy growing at the worst pace in five quarters.
“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.
China’s retirement age is among the world’s lowest despite significantly increased life expectancy over the decades. A bigger tax base and delayed access to benefits will relieve the pressure on the government to fund pensions as the elderly population rapidly expands.
The hike is aimed at “adapting to the new situation of demographic development in China, and fully developing and utilizing human resources,” according to the decision by the Standing Committee of the National People’s Congress.
The approval followed a July announcement by the ruling Communist Party that the retirement age will rise in a “voluntary, flexible manner.” Previous efforts to raise the threshold had failed in the face of public opposition.
“This is a big step toward countering a key drag on long-term growth — a shrinking working-age population. But it won’t turn the tide. Our long-term projections, which already factor in a bump in the retirement age, point to growth going down to about 1% by 2050.”
The Sept. 13 decision has left some people fuming over working into an older age, as well as those who fear greater competition in the job market.
“Are you asking me, when I’m 60, to compete with young people for jobs?” a Weibo user said on the X-like social media platform, where the news was the top trending item and garnered more than 530 million views as of the afternoon of Sept. 13.
Some also complained about employers’ discrimination against older job candidates, a problem that the government has long vowed to address.
Authorities acknowledged the potential short-term pressure on the job market at a press briefing on Sept. 13. Li Zhong, vice minister at the Ministry of Human Resources and Social Security, said the gradual pace of the change should lead to a “muted” effect on youth employment.
The top legislative body also ruled that starting 2030, workers will need to contribute to their pension accounts for a longer period before they’re eligible to receive payout. This requirement will increase gradually from 15 to 20 years.
“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. “Even though the move will increase pressure for the job market, in the long term it helps mitigate the impact from declines in the working-age population.”
