China population: plan to lift retirement age stokes workers’ anxiety as demographic crisis looms

He Huifeng
·7-min read

Speculation is running rampant among Chinese about how many years of pension income may be lost after the government announced plans to gradually increase the nation’s mandatory retirement age.

The move has sparked deep concern among working and middle class citizens, many of whom may now have to work for years more than planned and are scrambling to get their finances in order.

On Chinese microblogging site Weibo, a popular post on the new policy has been read more than 210 million times and garnered more than 19,000 comments in the past two weeks.

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Critics have raised concerns about the effect of the change on consumption, fertility rates and investments.

No one knows what an ageing China will look like in 20 years, we all have a lot of fear and uncertainty about it

Gong Wentao

“No one knows what an ageing China will look like in 20 years, we all have a lot of fear and uncertainty about it,” said Gong Wentao, a Shenzhen-based IT specialist in his late 40s. “My colleagues and I have been chatting a lot about how to prepare for it.”

Gong said some of his co-workers planned to sell properties in lower-tier cities in anticipation of higher vacancy rates, while others were considering mortgaging their homes to invest in high-return financial products. But he was opting for a more modest strategy: cutting daily spending.

“Either way, this reflects our anxiety about the delayed retirement age,” he said.

China’s retirement age has for decades remained unchanged at 60 for men and 50 for most women.

China to tap elderly population in bid to tackle looming demographic crisis, boost economy

But like its East Asian neighbours, China’s population is rapidly ageing and its fertility rates are plummeting – setting the scene for a demographic time bomb that could put the brakes on the nation’s economic growth.

To cope, Beijing announced early this month in its new five-year plan for 2021-25 it would extend the retirement age.

However, the move has struck a nerve with average Chinese, especially those born after 1970.

James Qiu, a Guangzhou-based sales manager in his 30s, said raising the retirement age by comparing China with developed countries – where people typically worked longer – was “unscientific and unfair”.

China’s basic social security, support and public services lag far behind those countries

James Qiu

“China’s basic social security, support and public services lag far behind those countries,” he said.

“We will face serious problems in our 50s and 60s; likely a significant drop in income or unemployment, because in today’s job market, very few private companies will hire an employee that old.”

That will increase the burden of medical expenses and mortgage payments, he said.

China introduced its controversial ‘one child’ policy in 1980 to reduce the nation’s fast-growing population, expanding the provision of contraception but also carrying out forced sterilisations and abortions.

China population: tumbling regional birth rates signal scale of country’s ageing crisis

It led to a sharp decline in the country’s fertility rate, from 5.81 in the 1970 to 2.31 in 1990, according to official data. It fell to 1.048 in 2019, three years after Beijing allowed Chinese couples to have two children.

At the same time, China’s population was rapidly greying.

In 2019, 254 million Chinese were aged 60 or above, accounting for 18.1 per cent of the total population, with 176 million older than 65, making up 12.6 per cent of the population. By 2050, China will have more than 500 million people above 60 years old, nearly one-third of the projected population, the China Development Research Foundation said in a report released last year.

As a result, the number of retirees in China is expected to balloon from 102 million in 2019 to 278 million in 2050, according to the Pension Fund Actuarial Report 2019-50, released by the Centre for International Social Security Studies and the Chinese Academy of Social Sciences.

The report showed the dependency ratio – which measures the number of dependents to the total working age population – would increase from 47 per cent in 2019 to 96.3 per cent in 2050, meaning about 1.22 workers would support one retiree in 2035, up from about 2.65 workers for every retiree in 2019.

And it could be China’s army of more than 270 million poorly paid migrant workers that are the worst off under the change.

“Extending the retirement age to 65 doesn’t mean we migrant workers can keep working with a stable income until the age of 65,” said Xie Zefei, a warehouse keeper in the manufacturing hub of Dongguan. “In fact, it only takes away our pension income for five or 10 years, which is actually most unfair to low-income workers.

“We have been working overtime daily in factories for decades, our strength and physical functioning deteriorate in our 50s. You can see that most migrant workers in their 50s are forced to leave urban cities and go back to their rural hometown, living on savings or odd jobs, but poor pensions.”

Delaying retirement would only add to inequality because social security services are much worse in rural areas compared to China’s bustling cities, he said.

Tom Ma, a native of Henan province who graduated from university in 2019, said the reform will spur more young jobseekers to seek out work in China’s civil service.

“Civil servants have no pressure of unemployment in their 60s,” said Ma, who is preparing to take his first civil servant exam. “They always have a stable income and a very decent pension, compared to those in the working class with private companies.”

Pushing back the retirement age could also delay the childbearing age in China and further reduce the country’s fertility rate, due to the high opportunity cost of childbirth and dearth of affordable childcare, some critics and research have suggested.

We all rely on grandparents to take care of children. Extending retirement age will definitely weaken the willingness of people to have a baby

Liu Shuya

“Property prices and the cost of living in the city are so expensive, young couples like me have to work full time,” said Liu Shuya, a barista in her late 20s who is expecting her first child soon.

“We all rely on grandparents to take care of children. Extending retirement age will definitely weaken the willingness of people to have a baby.”

According to Ministry of Education data, only about 4.71 per cent of the children admitted to nurseries in 2019 were below age three, suggesting that the wider family, particularly grandparents, take on the major burden of raising a child.

Evidence suggests this has the potential to influence births. A study released by Fudan University’s School of Economics showed that when parents retired, it positively affected their children’s fertility rates by about 6 to 9 percentage points.

Feng Jin, a professor with Fudan University’s School of Economics, said fertility rates and consumption among people middle-aged and above might dip in the short term as result of boosting the retirement age, but in the long run, overall consumption would increase as more people would work for longer.

But public opinion is largely opposed to delaying the retirement age, so the policy needed to be launched with caution, she said.

Adding to workers’ concerns is the fact there is very little opportunity for public discussion of the proposed changes. The public was last consulted on a large scale about delaying the retirement age nine years ago, when 62,106 respondents expressed their opposition and 2,584 rest were in support.

“I would love it if all our fears were unnecessary and China could become a developed country with decent social security like Europe and Japan before the ageing crisis outbreak,” Liu said. “But for now, I just feel worried about the reform and will definitely drop the idea of having two kids.”

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