Written by Farah Master
HONG KONG (Reuters) – China's top legislative body has passed a proposal to raise the country's retirement age, official Xinhua news agency said on Friday, speeding up a decades-old overhaul of laws to deal with economic pressure from a shrinking workforce.
China's retirement age is currently among the lowest in the world.
Change is accelerating as life expectancy in China has risen to 78 years as of 2021 from about 44 years in 1960 and is expected to exceed 80 years by 2050. At the same time, the number of working people needed to support the elderly is decreasing.
The retirement age will be increased for men from 63 to 60, while for women working in the white collar it will be increased to 58 from 55. For blue collar women it will be adjusted to 55 from 50.
The changes are scheduled to take effect on Jan. 1, 2025.
Having people work longer would ease the pressure on pension budgets as many Chinese provinces are already struggling with huge deficits. But delaying pension payments and requiring older workers to stay in their jobs longer may not be acceptable to all.
Hundreds of thousands of people took to social media after Xinhua reported that China's top lawyers discussed the topic on September 10, with many expressing concern that there would be too many job seekers chasing too few vacancies.
By raising the retirement age, the government can increase the labor force participation rate, helping to reduce the negative effects of population aging, said Xiujian Peng, a senior researcher at the Center for Policy Studies at Victoria University in Australia.
“The government must take action. If the number of people continues to decrease, the decrease in the number of workers will increase rapidly, with a very negative impact on economic growth.”
Xing Zhaopeng, ANZ's chief strategist for China said the move would likely have “no impact on the economy in the short term. In the long run, it will help avoid premature labor shortages and maintain stable productivity growth.”
