On October 4, 2024, China announced plans to gradually increase the retirement age for workers, a significant policy shift aimed at addressing the challenges of an aging population and a declining birth rate. The retirement age for men will rise from 60 to 63 years, while women in manual labor will see an increase from 50 to 55 years, and those in administrative roles from 55 to 58 years. This change will be implemented over the next 15 years, starting in early 2025, with no allowance for early retirement.
The current retirement age in China is among the lowest in the world, and experts warn that the country may face more severe challenges than many developed nations in the coming years. Yi Fuxian, a Chinese demographer, stated that earlier implementation of such a policy could have mitigated current issues related to the aging demographic.
China's birth rate hit a historic low of 6.39 births per 1,000 people last year, and the total population has declined by over 2 million for the second consecutive year. Despite government efforts to promote marriage and childbirth, many young women remain hesitant to have children.
Experts like Eli Friedman from Cornell University argue that raising the retirement age may not significantly alleviate the labor force contraction and could hinder the ability of older generations to assist with childcare, which is crucial in Chinese society.
Furthermore, the new policy will require employees to contribute more to the social security system to qualify for pensions by 2030, with a minimum contribution period of 20 years by 2039. This change comes amid concerns that Beijing's pension fund may be running out, with warnings from the Chinese Academy of Social Sciences predicting potential exhaustion by 2035.
While increasing the retirement age might alleviate some immediate pension pressures, experts caution that it is not a long-term solution. Friedman suggests that a structural change in the welfare system is necessary, advocating for a national pension system to enhance public confidence and ensure a dignified retirement.
This policy shift occurs against the backdrop of rising youth unemployment in China, which reached 18.8% in September 2024 for individuals aged 16 to 24. The government faces a delicate balance, as drastic changes could provoke social unrest among younger generations and those nearing retirement age, potentially leading to political crises.