No easy answers for ageing nation

Retirement ages have to keep up with demographics. That is why China's government has decided to raise the compulsory level in coming years; the ageing population and shrinking workforce dictates it. But the complexities of society mean that the changes have to come about gradually and be carefully thought through. A balance has to be struck between creating jobs and allowing people to work.

Such thought was put into the announcement of a raised retirement age by Human Resources and Social Security Minister Yin Weimin last Tuesday. He said the fast-greying population meant that new retirement rules would have to be rolled out within two years. Men presently have to quit work at 60 and women at 55 - requirements put in place in the 1950s when average life expectancy was below 45 years. But mainland Chinese are now typically living to 75 and with the population of pensioners soaring and the one-child policy having severely dented the number of young people able to support them, difficult decisions have to be made.

Making people work longer is a controversial matter. In an ideal world, workers would be able to retire when they want, their physical and mental abilities being arguably the only determinants in giving up a job. But the vibrancy and vitality of an economy is dependent on the nature of its workforce. Numerous governments therefore feel obliged to step in to set limits, their accounting being based on issues like lifespans, birth rates, public funding and pension schemes.

People over the age of 60 currently make up 15 per cent of the population, but that figure is forecast to rise to 39 per cent by 2050. Without action, the fractured pension system will crumble; two-thirds of provinces already suffer deficits in their schemes and a report by the Chinese Academy of Social Sciences in 2013 predicted that the accumulated shortfall by 2050 would amount to 90 per cent of national GDP. Heeding the advice of experts, among them from the World Bank, that a solution lies in raising the retirement age makes sense.

The details have still to be ironed out. But authorities have made clear the limit will be attained gradually and accompanied by pension reforms. Arguments that further relaxing of the one-child policy is an alternative should still be listened to; efforts to increase the low birth rate have to be maintained. As other countries well know, there is no simple solution to a rapidly ageing population.