The government is studying the feasibility of raising the
mandatory retirement age to counter the worrying pension fund
deficit, the China Economic Weekly reports.
The social security fund stood at 800 billion yuan (US$102
billion) in the red as 2006 dawned, compared to 36 billion yuan
(US$4.6 billion) in 2000, the Chinese-language magazine said,
citing a Ministry of Labor and Social Security document.
The magazine quoted unidentified ministry officials as saying
that a proposal would be put forward to the higher authorities
within a month on increasing the retirement age.
Guo Yue, a researcher with the All-China Federation of Trade
Unions Research Center, attributed the shortfall to the retirement
of many employees in their 40s or 50s, far earlier than the
requisite age -- 60 for men and 55 for women, or 50 in some cases.
Official statistics showed that in 2000, the average retirement age
was 51.2.
Raising the legal retirement age would delay pension pay-outs
thus enabling the pension fund to recover over time.
Zhang Hongmei, a bank employee who retired at 45 in 2003, said
she is satisfied with the 1,200 yuan (US$153) monthly pension.
Before retirement, she was paid 1,400 yuan (US$178) a month. Zhang
and many others contributed less to the pension fund than if they
had completed full working lives, but enjoy full pension benefits.
The policy allowing earlier retirement was implemented in the
mid-1990s, when state-owned enterprises were reformed.
Early retirement can alleviate short-term unemployment pressure,
but over time, it will negatively impact upon social security and
economic development in an aging society, according to the
magazine.
According to the United Nations, China is becoming an aging
society since the number of over-65s has exceeded 100 million,
accounting for 7.7 percent of the population, rising to 10.5
percent for over-60s.
Shanghai is already considering asking senior technicians and
engineers to continue working for five to 10 more years after
reaching their retirement age, Shanghai Morning Post
reported last week.
However, a central government official is reported to have told
China Economic Weekly that raising the retirement age too
fast would exacerbate unemployment.
The ministry estimates that at least 24 million urban residents
need jobs each year with only 11 million openings. In addition,
rural areas suffer from 100 million surplus laborers. "We need to
balance pension fund needs and unemployment," said the
official.
Worsening matters is that around 7.1 billion yuan (US$905
million) of the 2-trillion-yuan (US$255 billion) social security
fund has been misappropriated, according to the National Audit
Office.
Lengthening the working lives of professional talents would
benefit both individuals and the country, says a signed article in
Youth Daily.
Current regulations require male workers in factories to retire
at 55 and female workers at 50, while male officials, engineers and
professionals with special expertise retire at 60 and females at
55. The average retirement age in China stands at 51.2 years
--?approximately 10 years younger than that of many other
countries.
As a result, many people quit their jobs while both physically
capable and very experienced, representing a tragic waste of talent
to the nation's workforce.
?
From this perspective, allowing people to delay retirement would
not only satisfy the need for talent, but would also fulfill the
wishes of those wanting to extend their professional lives.
According to statistics from Shanghai, 78 percent of people with
high-end professional expertise aged between 60 and 70 are invited
back to work, with most willing to do so.
Such a phenomenon is not rare and has occurred now for close to
two decades. Given this fact, it would be a practical move to face
the reality and put off the retirement age.
More importantly, extending the professional life of high-end
talent may also help prepare for the looming ageing population
issue.
In the next 10 to 20 years, China will further become an ageing
society. It would be inevitable for the country to put off people's
retirement and keep them at work.
By extending the working time for part of the labor force as a
pilot scheme, the authorities will find out what consequences this
decision would incur, what problems may surface and gain precious
experience for future decisions.
However, it remains that when retirement is put off this will
worsen unemployment and make young people lose their jobs.
But sociological research also indicates that a social group may
become prematurely physically and mentally senile if people retire
too early. In essence, continuing professional activity promotes a
longer and more active life. Moreover, setting the retirement age
too low would add a heavy burden for the state and the working
population to support the pension fund.
Admittedly, individual choices should be respected on the issue
of retirement. While many people would like to work for another
couple of years, others may want to enjoy their lives in
retirement. Hence, another option is to set up a flexible
retirement age.
(China Daily November 28, 2006)