Should employees retire at earlier age?

With China facing the challenge of providing employment for new college graduates and migrant workers during this economic downtown, some suggest that the present workforce should retire earlier to ease the problem. Others disagree, saying that the present retirement age should actually be raised so that there are more people working to support an expanding ageing population. Experts discuss both sides of the issue, as reported on China Business News.

Yes

Zeng Xiangquan, dean of School of Labor and Human Resources, Renmin University of China:

The biggest problem is the lack of job openings, so we should consider allowing workers at State enterprises and public institutions to retire earlier to make way for young college graduates. At the least, we can consider replacing government and public institution employees who do not have a college degree with college graduates. While the number of college graduates has risen in recent years, the number of employees retiring from government agencies and public institutions has not increased as much. We can encourage existing government staff to retire earlier to solve the lack of job vacancies. At least in the short term, it will ease unemployment pressure, especially since small and medium-sized enterprises are cutting jobs to cope with the economic downturn.

However, this should not be compulsory. Nor should it apply to all agencies and institutions. The State can devise preferential policies, including giving more benefits to those who retire early as incentives.

Zhang Zhanxin, researcher, Institute of Population and Labor Economics, the Chinese Academy of Social Sciences:

We should look at multiple factors, such as pension funds, to determine whether we should raise the age of retirement. Based on the current situation we conclude that it is not the time to raise the age of retirement. Our No 1 task is to provide more jobs. We still have enough sources to finance our pension funds. That is we are not faced with an inadequate pension funding, but a tight job market. If the unemployment problem eases, we can first bridge the gap between the retirement ages of men and women. Chinese women generally retire five years earlier than men.

No

Li Zhen, economist, Renmin University of China:

China's retirement policy dates back to the 1950s, when the age of retirement for women was set at 55 while that for men was 60. This applied to government officials, public institution staff and State enterprise managers. At the time, the life expectancy in China was only 47 years, which means that the country did not face much pressure for supporting its elderly people.

After China adopted the family planning policy in the late 1970s, the labor supply dropped sharply. Meanwhile, the average life expectancy reached 73 years, resulting in a decreasing workforce to support an increasing ageing population. Therefore, China must raise the retirement age to ease the pressure on pension funding. Otherwise, China will have to cut pensions for retirees or deduct a higher amount of pension insurance from the income of the existing workforce.

Zhang Libin, researcher, Institute of Labor Science, the Ministry of Human Resources and Social Security:

It is not a workable solution to have people retire earlier to provide more jobs. We adopted such a method to solve the problem of redundant workers in State enterprises in the late 1990s. At that time, many people retired in their 40s, or even 30s, but their employers failed to provide them enough compensation and they had to rely on government grants to maintain a living. Allowing people to retire earlier not only failed to solve the problem of unemployment, but increased government expenditures.

It may not be a good solution to have people retire earlier, because it provides jobs for some while cutting jobs for others.

(China Daily 03/16/2009 page2)