Sat, Sep 14, 2024 page12

• China approves retirement age increase

  CHANGES: The retirement age for men would be increased to 63, and 55 and 58 for women, while the required years for pension payout eligibility would be raised to 20

  • Bloomberg
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  China is to raise its retirement age for the first time since 1978, a move likely to slow a decline in the labor force, but anger workers already wrestling with a slowing economy.

  The country’s top lawmakers endorsed a plan to gradually delay retirement for employees, Xinhua news agency reported yesterday.

  Men’s retirement age would increase from 60 to 63, while women’s would rise from 50 and 55 to 55 and 58, the report said.

  

  People are pictured on a train in Shanghai on September 20, 2022.

  Photo: Hector Retamal, AFP

  The changes would take place over 15 years, starting on Jan. 1 next year, it said.

  “Governments at all levels should actively respond to the aging of the population, [and] encourage and support the employment and entrepreneurship of workers,” the Standing Committee of the Chinese National People’s Congress said.

  They also called on officials to protect workers’ rights and improve care for elderly people, and empowered the State Council, China’s Cabinet, to adjust the measures if necessary. The approval followed a July announcement that the retirement age would rise in a “voluntary, flexible manner.”

  Allowing more people to work longer would counter demographic headwinds weighing on China’s economy, although it risks adding to public discontent amid an economic slowdown.

  “The timeline of raising the retirement age is pretty gradual. Policymakers probably have taken into account the potential negative impact and calibrated that carefully,” Societe Generale SA greater China economist Michelle Lam (林雪潔) said.

  The document said that starting in 2030, China’s workers would also have to pay longer into their pension accounts before they are eligible to receive their retirement payout. The requirement would be raised to 20 years from 15.

  The top legislature’s discussion of the plan earlier this week triggered an outpouring of anger on social media, with many people complaining about a sluggish job market.

  Some also said that employers often discriminate against older candidates, a problem that the Chinese government last month vowed to address.

  China’s retirement age is among the world’s lowest, despite significantly increased life expectancy.

  Since at least the 1970s, the threshold for workers has been kept at 60 for men and between 50 and 55 for women. The change would see women’s retirement age rise to 55 for ordinary workers and 58 for those in management positions.

  A bigger tax base and delayed access to benefits would relieve the pressure on the government to fund pensions as the population rapidly ages, with the birthrate falling to a record low last year.

  “The sustainability of the pension system may be the main consideration behind the move,” said Ding Shuang (丁爽), chief economist for greater China and North Asia at Standard Chartered. “The impact on the economy in the short term should be limited as the hike is gradual.”

  People aged 65 or older are expected to make up 30 percent of the population by about 2035 from 14.2 percent in 2021, a report by state broadcaster China Central Television said on Tuesday.
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