The government plans to raise the retirement age to 65 by 2045. But China’s pension system is already not working. While white collar employees and civil servants benefit from social security coverage, rural migrants in the cities are subjected to various forms of discrimination. Young people are also concerned about high levels of unemployment.

Beijing (AsiaNews) – An aging and progressively shrinking workforce is putting an increasing strain on China’s pension system. Based on current trends, the country’s social security system could run out of resources by 2035.

Despite a pension reform introduced in 2021 to raise the retirement age to 65 by 2045, a number of problems and disparities remain among workers, the China Labour Bulletin points out in a recent report; blue-collar workers, the self-employed, and young people entering the workforce have expressed some opposition to government reforms.

In China, men retire at 60, while women can do it between 50 to 55, after contributing for at least 15 years to the social security system.

But there are huge disparities between urban workers, those employed in the public sector, employees of state-owned enterprises, and migrants from rural areas: in urban areas, the percentage of those who retire at 50 is 63.4 per cent, almost double that of rural retirees at 31.1 per cent.

What is more, the gap in pension coverage between categories of workers has remained substantially unchanged over the years.

In the past, urban workers were not required to pay annual social insurance fees, but were still guaranteed a pension and medical coverage.

Even after the transition to the system of employment contracts in the 1990s, the situation did not change; in fact, early retirements begun to be granted.

Migrant workers, on the other hand, are de facto discriminated by the "hukou" system, under which services, including social security, are provided according to residence.

At the end of 2022, even though the urban population accounted for 65 per cent of the total, only three-quarters of residents owned an urban hukou. According to estimates by Tsinghua University, about 200 million people do not have the right to access basic services.

In addition, workers from rural areas work in the informal economy. According to 2017 data, only 35 per cent of migrant workers had a regular contract.

This problem is particularly felt in the construction sector, where many workers are hired on a daily basis (often waiting on the street to be picked up by lorries that take them to work) and therefore do not enjoy any type of social security.

In such cases, at the end of their working career, many workers, if they receive anything from their employers, get very little, something like 174 yuan (US$ 25 dollars) per month, compared to 3,326 yuan (US$ 460) for urban workers.

Workers in the gig economy, delivery workers for example, in most cases do not enjoy any social security coverage, sometimes simply due to a lack of information. The China Labour Bulletin expects this part of the workforce to grow in the future

Discrimination also concerns older workers. Finding a factory job over the age of 40 is almost impossible in China, so if a worker is laid off without 15 years of seniority, he or she risks not getting any pension. This means that they will have to continue to work, albeit without a regular contract.

This is what happens to many workers, forced to work even after reaching retirement age, despite legislation that prevents companies from legally hiring people over 60 years of age.

Those who work beyond retirement age do so in the informal economy, without the possibility of making further to contributions to their pension plan.

Making matters worse, China’s economy began losing steam in 2020. As a result, many Chinese, especially the self-employed, prefer to pay only 15 years of contributions to access the minimum pension or not pay them at all to have more money available.

Raising the retirement age is thus viewed with suspicion. Workers fear that they will be forced to work longer and give up a slice of their revenue for pension benefits they doubt they will receive.

Such mistrust is also widespread among young people, who fear that the current level of youth unemployment, 15 per cent, will only increase if jobs continue to be filled by increasingly older workers.

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• china
• labour
• pension
• retirement
• discrimination
• hukou
• rural
• urban
• young
• self-employed