China’s raised retirement ages brings a new era of working
By: Lily Xing
As communism changes in China, so does its population. The older retire as their pension depends more and more on the young, dwindling workforce. China’s birth rates, as well as their economic growth rate, which fell 5% behind their target, are also declining. Will raising the retirement age really be able to address these problems that have been years in the making? Perhaps not, but the policy marks a step in a better direction for the Chinese economy and people. Without the lasting implications of China’s former one-child policy, and with their raises in retirement ages, China will face a new era and workforce, with more workers and the ability to better fund their pension.
China’s one-child policy has been a factor at play here, causing lowered birth rates since its implementation in 1979 until its end in 2015. Within this period, population growth rates had dropped from 1.3% to only 0.1%. While China originally aimed to reduce its rapid population growth and help the economy grow, the sheer amount of people was too much to sustain, and the one-child policy ultimately backfired. Today, with a smaller population of young people, fewer workers pay taxes to fund pensions for the older, but still relatively young, retired population. Because of this, CNN predicts that China’s public pension fund will run out of money by 2035 if government policies don’t change. Similarly, China’s economic growth rate has taken a hit as well, slowing from around 8% in the early 2000s to only around 5% currently, with the growth rate predicted to be as low as 1% by 2035 without a change in government policies. To make up for this, China has decided to gradually raise its retirement age, starting January 1st, 2025, allowing for changes in its workforce to occur.
A graph of what China’s pension fund is projected to be at in the next 10 years https://www.caixinglobal.com/2019-04-19/charts-of-the-day-chinas-pension-system-is-out-of-pocket-101406390.html
The retirement age was long overdue for a change in China. The government of Mao Zedong instituted the previous retirement age of 50 for women and 60 for men, which has remained unchanged since 1950. At the time, the average life expectancy was around 40 years, due to poor working conditions such as low wages and working overtime. In an interview on BBC, a 72-year-old farmer remarked that he had no retirement pensions to live off of and had to keep working to make ends meet. It’s not that he wants to work; rather, he must do so to sustain himself. At his age, he wouldn’t be able to work much longer anyway, making it the job of his children to look after him, as he had no pension to support himself. However, with the one-child rule that was put in place, other families struggled to find children to look after elderly, as the working population was smaller. He and his wife make around 20,000 yuan per year—equivalent to 2,700 USD. However, the price of the corn that they sell is going down, resulting in a huge toll on their profits. With the new rise in the retirement age, the elderly won’t have to rely so much on their children to take care of them after retirement, and won’t have to worry about their pension, as a larger workforce would be there to pay it.
This change in retirement age is beneficial and an adjustment to China’s current economy. Now, the burden of pensions won’t rest only on the younger workforce but also on those in their late 50s and early 60s, who are still capable of working. Not everyone is fond of this change, as a 35-year-old was a bit sad that she would have less time for everything she planned for after retirement. However, not everyone sees the raised retirement age as a downside. A 52-year-old resident in Beijing, China, who will now retire at 61 instead of 60, views the policy as a step in the right direction as China’s society is growing older, which necessitates the retirement age to be higher. China’s new retirement age will definitely have a positive effect on their people and economy, benefiting them in the long run.
As retirement ages change in China, so will its economy and workforce. With the removal of the one-child policy in 2015 emerges a larger, younger population, which will ultimately lead to more workers making up for the lack of pension funding for the older generation, hopefully leading to a more sustainable lifestyle. Similarly, people don’t need to retire as early, as they live longer currently than compared to before and can work longer. With the change in the retirement age, a new age of working and living in China will emerge, allowing for adequate funding for pensions and a stronger economy.
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