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China’s Workforce Crisis: Why Lawmakers Are Pushing to Raise the Retirement Age

Alina Wang
A native of New York, Alina has a Bachelors degree in Corporate Communications from Baruch College and writes about human rights, politics, tech, and society.
Published: September 12, 2024
The photo taken on August 26, 2022 shows a job seeker speaking with a recruiter of a company during a job fair in Beijing. (Image: JADE GAO/AFP via Getty Images)

As China grapples with the rapid aging of its population, lawmakers are now considering raising the country’s retirement age in an attempt to address mounting economic challenges. 

But the proposal to delay retirement, which was recently reviewed by China’s top legislative body, has sparked widespread debate and anger. With concerns over youth unemployment, a shrinking workforce, and a pension system at risk of running dry, China is facing an ominous moment in its economic future.

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A shrinking workforce

At the heart of this discussion is the shifting demographic landscape in the country. Life expectancy has risen significantly in recent decades, reaching 78 years as of 2021, and is projected to exceed 80 years by 2050. Meanwhile, the working-age population that supports retirees has been shrinking, with each retiree now supported by five workers — a ratio that could drop to 2-to-1 by 2050. 

This imbalance is putting enormous pressure on China’s pension system, which, according to the state-run Chinese Academy of Sciences, may run out of funds by 2035.

The photo taken on August 26, 2022 shows people attending a job fair in Beijing. China’s slowing economy has left millions of young people fiercely competing for an ever-slimming raft of jobs and facing an increasingly uncertain future. (Image: JADE GAO/AFP via Getty Images)

The retirement age in China is among the lowest in the world, set at 60 for men, 55 for women in white-collar jobs, and 50 for women in factory positions. In comparison, many developed countries have set their retirement ages closer to 65. China’s current policy was established when life expectancy was much lower, and now, with millions of people living longer, the system is strained.

“It is an inevitable choice for China to adapt to the new normal of population development,” said Mo Rong, Director of the Chinese Academy of Labour and Social Sciences, as he reflected on the critical need for reform.

Pension deficits

To make matters worse, several Chinese provinces are already experiencing pension budget deficits. According to data from the finance ministry, 11 of the 31 provincial-level jurisdictions are running in the red. Extending the retirement age could alleviate some of this financial strain by delaying pension payouts, while also keeping older workers in the labor force for a longer period. But experts are also noting that the solution comes with its own set of challenges.

The Chinese Academy of Labor and Social Sciences emphasized that reform is urgent. National health authorities have projected that the number of citizens aged 60 and older will rise from 280 million to over 400 million by 2035. This rapid increase in the elderly population is comparable to the combined populations of Britain and the U.S., underscoring the sheer scale of the issue.

Workers sort packages for delivery ahead of the Singles Day shopping festival which falls on November 11, at a JD.com warehouse in Beijing on November 9, 2021. (Image: JADE GAO/AFP via Getty Images)

Meanwhile, the Chinese Communist Party (CCP) announced in July that it would gradually raise the retirement age, but the specifics of this plan remain under review. Draft changes to the law are expected to be made public for feedback in the coming weeks, and lawmakers are carefully considering the impact of these changes on both the elderly and younger job seekers.

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Tension between generations

One of the most prominent concerns surrounding the reform is the impact it could have on an already struggling job market. Youth unemployment has become a pressing issue in China, and many citizens fear that older workers staying in their jobs longer will only exacerbate the problem. This sentiment has been echoed widely on Chinese social media platforms.

“Young people cannot find jobs, middle-aged people are worried about being laid off, and now there is another problem: the elderly can’t retire,” said one Weibo user (a popular blogging site in China) in response to the discussions in Beijing.

This picture taken on September 6, 2012 shows three Chinese women with their babies as they sit on a bench along a street in Beijing. In 2016, the Chinese government dismantled its controversial ‘one-child policy’ as a means of rebalancing China’s aging population in order to stave off a demographic crisis. (Image: WANG ZHAO/AFP via GettyImages)

While the public’s apprehension is understandable, experts argue that the retirement reform is unlikely to pit older workers against young job seekers for the same positions. “It’s a different set of jobs that older people are going to be keeping on, blue-collar and white-collar jobs which will be different to entry-level ones,” said Stuart Gietel-Basten, professor of Social Science and Public Policy at the Hong Kong University of Science and Technology.

Still, China’s economy, like many others, has seen structural shifts in its job market. In particular, with automation and technology reducing the availability of traditional blue-collar jobs. This has left many young workers struggling to find stable employment.

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In addition, the rising cost of living and housing in urban areas has placed further pressure on young people to secure well-paying jobs quickly. Many now fear that prolonging the careers of older workers will reduce their opportunities to move up the career ladder or secure positions that offer long-term stability. 

The road ahead

Countries like Japan and South Korea, which have also faced aging populations, have successfully raised their retirement ages to 65 and 63, respectively, in response to rising life expectancies. These countries offer potential models for China to follow, though there are significant differences in how pension systems and employment laws function across regions and industries.

An elderly man and woman are pushed in wheelchairs along a street in Beijing on May 11, 2021. The CCP, facing compounding crises of a collapsing birth rate and an increasingly elderly population, has resorted to upgrading its two-child policy to a 3-child policy. (Image: WANG ZHAO/AFP via Getty Images)

In China, the challenge is further complicated by disparities between rural and urban areas, as well as among different provinces. Migrant workers and those engaged in gig work, for example, often face inconsistent access to pensions due to frequent movement between jobs.

“When you look purely at life expectancy, it should be raised, but it’s got to be done in a fair way,” said Gietel-Basten, adding, “Particularly if you are a migrant or gig worker who has moved around and may not get those years paid in.”

As China’s population continues to age and its workforce shrinks, reform is becoming increasingly necessary. The balancing act for lawmakers will be to implement these changes in a way that addresses both the immediate economic concerns and the broader social implications, notes Mo. 

China must “adapt to the new normal of population development,” he said. Whether through gradual reforms or more drastic measures, the country is at a crossroads, and how it navigates this moment will shape its economic future for decades to come.