China to raise retirement age amid demographic decline

For the first time since the 1950s, China is planning to raise its retirement age amid a shrinking workforce and looming pension budget shortfalls. 

The retirement age for men will be raised from 60 to 63. Women in blue-collar jobs will see an increase from 50 to 55, and those in white-collar roles from 55 to 58. 

Authorities say the change is set to take place gradually every few months over the next 15 years, starting at the beginning of 2025. Early retirement will not be permitted, although individuals may choose to delay their retirement by up to three years, according to state news agency Xinhua.

Too little, too late?

China's current retirement age is one of the lowest in the world, and even with the policy taking effect next year, it will still be below the retirement threshold in most developed countries, including Germany. 

Yi Fuxian, a Chinese demographer and senior scientist at the University of Wisconsin-Madison, told DW that in the coming years, China may face greater challenges as an aging society than most developed countries. 

"China has kept the retirement age unchanged until now, and the recent delay is still insufficient," Yi said, emphasizing that if this policy had been implemented 20 years earlier, "the current issues might have been avoided."

Last year, the birth rate in China hit a record low of 6.39 births per 1,000 people. The total population also dropped by over 2 million, the second straight year of decline.   

In recent years, Chinese authorities have implemented policies to encourage marriage and childbearing. However, many young Chinese women remain unconvinced about having children, especially as growth in the world's second-largest economy slows. 

Eli Friedman, a China labor politics expert at Cornell University in the US, told DW that raising retirement ages would do little to help with workforce contraction. "If anything, it might push in the other direction," he said. 

Friedman explained that grandparents typically play a crucial role in sharing the labor of caring for multiple children in Chinese society. If these older generations are required to delay their retirement, fewer will be available to help with child-rearing responsibilities. 

China's cash-strapped social security system

Additionally, China's new policy will require employees to contribute more to the social security system to receive pensions starting in 2030. By 2039, workers must have contributed for at least 20 years to be eligible for their pensions. 

This change comes as Beijing's pension pot is believed to be running dry. In 2019, the state research institute Chinese Academy of Social Sciences already warned about a potential pension depletion by 2035 – an estimate made before the economic impact of the COVID pandemic. 

"The government has little choice because of the significant shortfall in the social security system," Yi said. But the inability to support the aging population "seriously undermines the government's credibility."

While raising the retirement age could help ease pension strain in the near future, "it's hard to say how long that can last," Yi said.

"It's like deferring a ticking time bomb," he added.

Structural changes needed

To address the pension budget shortfall, Friedman said that a structural change in the welfare system is more necessary than merely adjusting the retirement age. 

China's current pension system is highly decentralized, with different localities having their own variations — a situation experts warn is likely to widen regional inequities. 

For local governments facing falling tax revenue, "it becomes harder for them to meet their financial obligations," Friedman added. 

He suggested that the Chinese government should establish "a national pension system," which is common in many countries, to instill greater confidence in the public retirement system. 

With such confidence, people are more likely to feel secure about spending money in the present, as the key issue is not just the retirement age but whether people will have adequate pensions to "sustain a dignified retirement."

Youth unemployment still high

Another impact of China's gradually raised retirement age will be strongly felt by those just entering the workforce. 

The delay in retirement means fewer people will be leaving the labor market, "which means that there are fewer jobs opening up for young people," Friedman said. 

This comes at a time when China's unemployment rate for people aged 16 to 24 has been steadily rising, even after the government adjusted its calculation method to exclude those still in school. 

In September 2024, the National Bureau of Statistics of China showed youth unemployment hit 18.8% — the highest level since the new system of record-keeping began in December. 

"This highlights the dilemma faced by the Chinese government," Yi said, noting that Beijing is avoiding drastic changes due to concerns over potential social unrest.

Any "sudden significant change" in the retirement age, he explained, could spark protests from younger generations and those currently in their 50s. 

"It could even trigger a political crisis," he said. 

Edited by: Wesley Rahn