Raising the retirement age and encouraging older people to participate in economic and social activities can ease the pressures of an aging society
As the seventh national population census shows, China still has abundant labor resources with a large working-age population, and the quality of its population has improved.
But China has become an aging society. As it strives to become a modern socialist country, it must develop a national strategy to solve the problem. Although the aging of its population is accelerating, this demographic dividend is turning into a talent dividend.
The improvement in the life expectancy of the elderly has laid the foundation for the exploitation of elderly human resources. Before the founding of the People’s Republic of China in 1949, the average life expectancy in China was only 35 years. She passed 50, 60, and 70 in the 1950s, 1970s, and 1990s, respectively. It reached 77.3 years in 2019, and is expected to reach 81.5 years in 2050.
The years of old age have steadily increased. From 1950 to 1955, a 60-year-old man in China could expect to live 11 years longer. In 2015-2020, a 60-year-old Chinese could expect to live another 20.2 years. By 2050, the remaining lifespan after age 60 is expected to reach 23.8 years.
If the current retirement and pension ages remain unchanged, the increase in the remaining years of life of older people could overwhelm pension and old-age care systems.
A proportionally shorter working life and prolonged drinking years will increase the burden of support for the elderly. Therefore, it is time to delay retirement, encourage older people’s participation in economic and social activities, and explore the potential of older human resources.
Developed countries were the first to feel the pressure of an aging population.
Raising the retirement age and encouraging men and women to retire at the same age have become common reform practices in developed countries, keeping older people of both sexes in the labor force. The legal retirement age in most developed countries is often adjusted flexibly according to retirement income and years of payment. The retirement age can be made more flexible by reducing the state pension for people taking early retirement and increasing it for those who delay retirement.
In 2020, the number of people aged 60+ and 65+ in China were 264 million and 191 million, accounting for 18.7% and 13.5% of the total population, respectively. There is a need to be aware of and harness the dividends of improved life expectancy for demographic, economic and social transformation in an aging society.
The mandatory retirement age in China was set in the 1950s, when the average life expectancy was around 45 and the proportion of the educated population was low.
In addition, at that time, the rate of urbanization was less than 15% and the majority of people performed heavy manual labor. The total fertility rate was above 6. Today, the average life expectancy at birth is 77.3 years and the population aged 15 and over receives an average of 9.9 years of education. More than half of the recently increased labor force has a higher education. The urbanization rate rose to 64% and the fertility rate fell to 1.3. China has seen an improvement in industrial and technological progress. With economic and social development, the legal retirement age set in the 1950s has now passed. Improved education has delayed the age at which the working-age population enters the labor market, while the retirement age remains unchanged. This will lead to short working lives for groups with higher levels of education, which will be a waste of human resources and loss of human capital.
As life expectancy has improved, the retirement age should be raised.
The outline of the 14th five-year plan (2021-25) and the long-term goals for 2035 propose delaying the retirement age and promoting the full use of human resources.
In addition to encouraging older people to continue working, the government must also explore the potential of a well-educated workforce. Promoting a high-quality workforce can improve labor force participation and productivity, which will boost economic growth and social development.
Since the reform and opening up of 1978, great successes have been achieved in improving the overall quality of population and human capital. The population rate with nine-year compulsory education and the gross secondary school enrollment rate reached 95.2% and 91.2%, respectively, exceeding the average level of middle- and high-income countries.
A total of 220 million people have received a university or higher education, representing 15.5% of the total population. As of 2018, annual enrollment in colleges and universities exceeded 10 million, indicating that the number of graduates will exceed 10 million per year on average during 2021-25, which is equivalent to the number of new- annual born during the period. Improving overall human capital has become a key driving force for China’s economic growth and has brought opportunities for the socio-economic development of an aging society.
Population migration must be encouraged to unlock demographic dividends. The comparative advantages of labor and capital allocation can promote the upgrading of technology and industrial restructuring, promote the migration of people from low-end to high-value-added industries, stimulate the flow of between regions and industries and stimulate economic growth.
In 2020, China’s migrant population reached 376 million, an increase of 69.7% over 2010, accounting for 26.6% of the national total.
The economic and social participation of the migrant population is improving, with a quarter of Chinese flocking to cities and towns.
Migration has changed population distribution, accelerated urbanization, and brought about high-quality development in the new era.
The author is Director and Professor of the Research Center for Strategic Studies in Aging and Development at Nankai University. The author contributed this article to China Watch, a think tank powered by China Daily. Opinions do not necessarily reflect those of China Daily.
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