Can China get old and rich at the same time?

By Aidi Hu (Senior ILO social security expert )
11:21 AM, November 27, 2012

In 2013, there will be more than 200 million people aged 60 or over in China. This is more than the total population of countries like Indonesia, Japan, Brazil or Russia, which are some of the world’s most populous nations.

By 2050, the number of elderly people in China is expected to reach 487 million or about one third of the entire population.

The challenge does not only come from the sheer size of the elderly population, but also from the increasing pace of ageing in Chinese society.

The latter is the result of two combined factors: the baby boom between the 1950s and 1970s, and the abrupt introduction of the one-child policy in the late 1970s.


Social protection for all, but is it enough?

Rapid ageing will have a profound impact on all aspects of Chinese society, including the labour market and the social protection system. The well-being of everyone in China, not just the elderly, will depend on how the country meets this challenge.

China is close to achieving universal pension coverage for its 200 million elderly, but only about a third of them have pensions that adequately cover their basic needs. The rest depend on their families to make ends meet.

True, awarding pensions to all does help reduce poverty in old age. But the relatively small amount that two-thirds of pensioners get, explains, among other reasons, why the proportion of elderly people living in poverty in China is still significantly higher than in Japan.

So there is a need to continuously improve pension levels – and the quality of health care services – particularly for low-income earners, the elderly in rural areas, women and other vulnerable groups.

With increased life expectancy and improved health services, raising the current retirement ages* seems not only feasible but also inevitable. This would enable China to better cope with the increasing pressure to finance social security provisions.

A skilled workforce is key

Ageing also has, and will continue to have, an important impact on the labour force.

The number of Chinese workers relative to the elderly population is declining (not just in China but in many other societies). This number represents the country’s human capital potential to produce the necessary amount of goods and services for the entire population.

But that’s only the quantitative aspect. In today’s globalized world a skilled labour force is a crucial factor in determining the quality as well as the quantity of economic growth.

China cannot content itself with being the world’s factory. It needs to invest more in the education and training of its labour force, in order to produce more and better goods and services. This will benefit all groups, including the elderly. This way China will be able to grow old and rich at the same time.

* The normal retirement age varies. It is 50 years for women workers, 55 for female managerial staff and 60 for male workers under the old-age pension schemes for urban workers

Social protection floors

In June 2012, the 101st session of the ILO’s International Labour Conference, adopted a Social Protection Floors Recommendation (No. 202) to enhance existing international standards on social security.

The Recommendation states that social security is a basic human right, requiring ILO Member States to develop and improve their social security systems to ensure that all citizens, including the elderly, the disabled, children and other vulnerable groups, will have income security and access to health care, at least at a level no lower than the nationally defined minimum.

When the economy develops and the national circumstances allow, the range and level of benefits should be progressively raised in line with the standards set out in other ILO social security Conventions and Recommendations.

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