China: Study Points Pension Reform to Deal with Coming Age Wave

A report from the Center for Strategic & International Studies warns that the aging of China’s population could usher in a new era of slower economic growth and mounting social stress as tens of millions of Chinese arrive at old age over the next few decades without pensions and with inadequate family support. The authors of "China’s Long March to Retirement Reform: The Graying of the Middle Kingdom Revisited" evaluate recent government efforts to prepare for the challenge and outlines an ambitious new reform plan and argue that, despite the current economic situation, delay in addressing address the long-term aging challenge is not an option.

Among other things, Richard Jackson, Keisuke Nakashima, and Neil Howe present a plan that provides for a universal poverty backstop that would protect all Chinese against an uncertain old age, and that would also create a national and fully portable system of funded retirement accounts. This would allow China to care for a much larger number of older people without overburdening its smaller working generation and help China to maintain rates of savings, investment, and living standard growth as its population ages. With respect to retirement age:

The minimum retirement age would initially be set at 60 for men and 55 for women, just as it is in the current basic pension system. These low retirement ages are necessary because today’s older workers often do not have the skills to compete in China’s rapidly modernizing economy. But as these workers are replaced by younger and higher-skilled cohorts and as China’s population ages, longer work lives will not only become feasible, but essential. Our plan therefore provides for gradually raising the minimum retirement age for both sexes to age 65 by 2030, after which it would be indexed to longevity.

Sources: Center for Strategic & International Studies Summary (April 22, 2009); Reuters "Age wave to come crashing soon over China's economy" (April 27, 2009)

Europe, China Promote Dialogue on Demographic Aging

On a visit to China, Vladimír Špidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities, signed an European Union-China agreement to promote policy dialogue on issues of common interest and on long-term challenges in employment and social policy, such as demographic ageing. The agreement--or Memorandum of Understanding--sets up a structured dialogue with China's top think tank--the Chinese Academy of Social Sciences--on future policy challenges in areas such as employment, social security, demography, social dialogue and labour relations.

Another huge problem that China is only now beginning to confront - and which Europe knows plenty about - is an ageing population.

As a result of its "one family, one child" policy and of the fact that richer Chinese now live longer, the life expectancy rate of Chinese men has now risen to 71.3 years, compared with 63.2 years in India.

The EU has so far provided 20 million euros ($28.8 million) in funds, as well as technical assistance and training of civil servants, to help China modernize its pension system.

Such help is not entirely free of self-interest, however. If Chinese workers were granted better pensions and more rights, for instance, this would limit "social dumping" - a term used to describe a country's ability to export cheap products by enforcing only weak labour standards.

Sources: European Commission News Release (January 11, 2008); NDTV "EU advises China on welfare, labour laws" (January 13, 2008); People's Daily "Aging society a common challenge for EU and China" (January 15, 2008);

Global Aging and Retirement: AARP Releases Country Surveys of Opinon Leaders

In conjunction with a conference on "Reinventing Retirement Asia: Enhancing The Opportunities of Aging" held in Tokyo March 15-16, AARP released a survey of opinion leaders in Asia and Oceania, which reveals that most believe their countries are ill prepared to deal with the challenges of an aging population. Although the survey report covers several aspects of aging and society, two core focuses were on older workers and retirement.

AARP's report--"Aging in Asia and Oceania: AARP Multinational Survey of Opinion Leaders 2006"--was prepared by Princeton Survey Research Associates International thrugh a survey of opinion leaders in the United States and in seven countries in Asia and Oceania. The survey was designed to increase AARP’s knowledge of aging issues and attitudes in key Asian markets and to compare attitudes and policies towards aging in the US to attitudes and policies in Asian and Oceanian societies.

According to the overall summary, opinion leaders vary as to the age at which a worker becomes an "older" worker:

Averaging 60 years of age among all opinion leaders interviewed, the average age at which opinion leaders would consider someone an older worker varies somewhat from country to country, ranging from a high of age 66 in Japan to a low of age 55 in Australia. Half of opinion leaders say that the transition to becoming an older worker occurs some time between the ages of 60 and 69.

Other key findings show that opinion leaders perceive older workers as wise, respected, and productive, but that "businesses do not see older people as a
potential source of productive labor and employers are not well prepared for a future workforce comprised of more older workers." Opinion leaders also say that it is a responsibility to society to address older worker issues, older workers should be accommodated, the mid-60's is an appropriate time to retire, and that there should not be mandatory retirement.

In addition to the full report, AARP has issued specific country reports for the United States and for these Asian or Oceanian countries:

• Australia
• China
• India
• Japan
• New Zealand
• Singapore
• South Korea

Source: AARP News Release (March 14, 2007)

China: White Paper on Aging Issues Published

China is acknowledging the urgent challenges presented by the country's aging population with the publication of a cabinet-level White Paper on the problem, which is part of an effort to grapple with the prospect of rising social-security and healthcare costs, a tightening labour market, and other potential obstacles to continue rapid economic growth.

The White Paper--"The Development of China's Undertakings for the Aged"--released by the China National Committee on Aging addresses a number of topics, including the old-age security system, health and medical care for the aged, social services for an aging society, cultural education for the aged, participation in social development, and safeguarding elderly people's legitimate rights and interests. With respect to Participation in Social Development, the paper calls for giving senior citizens encouragement and support to integrate into society and continue to make contributions to the social development of China.

In urban areas, governments at all levels guide senior citizens to participate in the fields of education and training, technological consultation, medical and health work, scientific and technological development and application, and care for the younger generation, in accordance with the demands of economic, social, scientific and technological development.

In rural areas, governments encourage people in their 60s to engage in farming, aquaculture and processing activities. Statistics show that among the elderly people of China, in urban areas 38.7 percent participate in public welfare activities, and 5.2 percent still have paid work; in rural areas, 36.4 percent are engaged in farming.

Source: People's Daily Online "China faces grim challenges to cope with ageing population" (December 12, 2006); China Central Television China addresses aging issues" (December 12, 2006); The Brunei Times "China grapples with decrepit population" (December 20, 2006)

Korea: China and Japan Compete for IT Workers To Replace Aging Workers

Korea, which is having its own aging problems, is losing a significant number of workers to non-Korean employers overseas due to job shortages, according to DongA.com. Moreover, Korean companies are not making enough systematic efforts to retain workers.

China is eying Korea’s high-tech workforce who they think will boost its industrial growth. Grappling with an aging population, Japan is looking for workers who will help relieve itself of the burden of workforce shortages.
...
Japan is luring more Korean workers to enhance its IT competitiveness and resolve its workforce shortages problem caused by aging. Indeed, the Japanese government and businesses are making hard efforts to recruit Korean and Chinese IT workers under the second-phase “e-Japan” project whose main objective is Japan’s comeback as an IT powerhouse.

Source: DongA.com "China, Japan Inc. Recruiting Koreans" (December 23, 2006)