China will raise the retirement age for the first time since 1978, a move that could stem a decline in the labour force but risk angering workers.
The government has endorsed a plan to delay retirement for employees by as long as five years, Xinhua News Agency reported. Men will now retire at 63 instead of 60. Women will retire at 55 instead of 50 for ordinary workers, and 58 instead of 55 for those in white-collar jobs.
The change will be based on people’s birthdays, will be gradually introduced over 15 years starting in January, and make more people work longer. This is to address the challenges of an ageing population, by ensuring there are enough workers to pay the taxes to provide pensions, although it risks adding to public discontent.
“The timeline of raising the retirement age is pretty gradual. Policymakers probably have taken into account the potential negative impact and calibrated that carefully,” said Michelle Lam, Greater China economist at Societe Generale SA.
Shares of Chinese companies providing health and elderly care jumped on the news.
“People may face more health problems if the retirement age is raised. And the pressure of supporting parents may require more elderly care institutions to share the burden,” said Shen Meng, a director at Beijing-based investment bank Chanson & Co.
China’s retirement age is among the world’s lowest despite significantly increased life expectancy over the decades. A bigger tax base and delayed access to benefits will relieve the pressure on the government to fund pensions as the elderly population rapidly expands.
