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- The government’s plan to raise the retirement age was met with backlash from workers, especially blue-collar migrant workers.
- It is difficult for migrant workers to find jobs that pay for social security for 15 years--the prerequisite for getting a pension when retired. Workers are worried that the retirement age reform would make things even harder.
- There is a disparity in social security coverage and benefits between urban workers and migrant workers. Many migrant workers still have to work after the retirement age, with little or no social security. Precarious and informal employment across sectors is a significant reason and will likely continue with the growing gig economy.
China is currently grappling with a pressing demographic challenge, marked by record-low birth rates and low retirement ages, leading to a continuous decline in the working-age population. According to the National Bureau of Statistics, the working-age population dropped to 61.3% in 2023, down from 62% the previous year. The shrinking workforce and ageing population are increasingly straining China’s pension system. Current projections indicate that, without intervention, the social security system’s resources will be depleted by 2035.
In response to these challenges, the Chinese government announced a plan in March 2021 to gradually raise the retirement age to 65 by 2045. While this reform is a necessary step to address demographic issues, it has been met with significant backlash from workers who feel their concerns have not been adequately considered.
Some workers have pointed out the vast difference between different types of workers in retirement benefits in China. This stark contrast, where some retired cadres earn a pension much more than an ordinary middle-aged factory worker's wage, clearly indicates the inequality in the pension system. This disparity not only exacerbates the financial challenges of some workers but also highlights the injustice in the current pension system.
Some blue-collar workers questioned:
“Can we suggest that white-collar workers retire at the age of 80, while blue-collar workers retire at the age of 50 years old?”
“Blue-collar workers over 45 years old can hardly find a job that offers to pay you social insurance fees.”
Workers are also concerned about the increasing unemployment rate in the current economy and are unhappy about waiting longer to receive their pensions.
“On one hand, youth workers are facing unemployment; on the other hand, old workers cannot retire…”
“Actually, we support early retirement (instead of delaying) so that youth can get more job opportunities.”
In general, many blue-collar workers do not support delaying the retirement age because they recognise that such a plan would require them to work for longer and pay more insurance contributions, while they receive little guarantee that they will get more in return.
Workers are naturally unhappy about their pensions being delayed and having to work for longer. However, the key underlying issue is that blue-collar workers in China, mainly migrant and flexible workers, lack faith in the current social insurance system. Many fear that delaying their retirement age means they will lose the benefits they are due when they are old.
Retirement is an issue not just about age
The retirement age policy in China, with a legal retirement age of 60 for men and between 50 and 55 for women, is outdated and no longer reflective of the country's changing demographics. Despite a rapidly increasing life expectancy, the effective retirement age in China remains just 54 years old. This is significantly lower than the OECD average of 64.4 years, indicating a clear need for the government to consider raising the retirement age to better align with current conditions.
The current pension policy in China states that workers can receive pensions upon reaching the statutory retirement age and contributing to the social security system for 15 years or more. Consequently, blue-collar workers often rely on this policy to access benefits once they meet these criteria.
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However, this does not necessarily mean that all workers will stop working after the retirement age. In fact, due to the disparity of social protection among workers, it is quite common for some workers over 60 years old to continue working even though they receive a pension payment. These workers are unable to sign labour contracts with employers legally; many of them have to work under service contracts in sectors such as sanitation and construction or as security guards. Unfortunately, without a formal labour contract, employers are not obliged to contribute to their workers' social security.
In 2024, several cities increased the age limit for taxi drivers to 65. Just two years prior, it was mandated that female taxi drivers in Sichuan would lose their driver qualifications when they turned 50. These drivers are unable to sign labour contracts because they have reached retirement age.
In May 2024, sanitation workers in the Shenyang subway protested that they were unable to pay social insurance fees if they joined the company after turning 50 years old. In response, the subway management company stated, "It is not that we don't want to pay social insurance fees for workers, but there is a policy that prohibits us from paying for those over 50 years old."
The recent economic downturn in China also affected workers' social security contributions, as some workers stopped paying to keep more money. Specifically, certain workers are now opting to only pay for 15 years in order to receive the minimum pension in their retirement cities; also, some flexibly employed or self-employed workers have stopped paying social insurance fees since the pandemic, cutting it out while maintaining only basic medical insurance, and some families have even cut this out too. Many have indicated they may consider resuming pension payments when they are economically feasible. Most likely, they will just pay the pension fees for a cumulative of 15 years, enough only for them to receive a basic pension. Unfortunately, this means that migrant workers either receive much lower pensions than urban workers, or flexible workers may receive no pension at all.
The fact that some workers cut back on their pension payments while some are working past their retirement age, reveals a disparity of pension protection among workers in China—while many workers enjoy good pensions and retire happily, millions of workers in China receive inadequate pension contributions and thus are worried about a delayed pension payment. Worse still, some workers are not guaranteed a pension at all.
Urban workers normally guaranteed a pension within legal retirement age
As with many aspects of the Chinese social security system, there are significant disparities between urban and migrant rural workers regarding retirement age. In urban areas, the percentage of those who have retired by age 50 is more than twice as high (63.4%) as their rural counterparts (31.1%). One of the critical reasons for this disparity is the stark difference in pension coverage and the amount of money saved in pension funds, which differs significantly between urban and rural areas.
Historically, many urban workers, especially those employed by state-owned enterprises (SOEs) or the government, could depend on the concept of 'iron rice bowl', which offered them guaranteed lifetime employment and promised pensions. Under the previous policy, urban workers were not required to pay social insurance fees annually, and they were ensured a pension with medical coverage when they reached retirement age. As a result, they generally retired upon reaching the mandatory retirement age.
Even since the transition from the iron rice bowl to the labour contract system, retirement trends have remained largely unchanged for urban workers, with a significant portion retiring happily once they have reached retirement age as they can rely on their pension. However, substantial retirement occurs even earlier than the official retirement age in urban areas. Part of this practice reflects the legacy of 1990s efforts to restructure state-owned enterprises (SOEs) – after pension responsibilities were shifted from enterprises to city-level entities, formal sector employees were granted early retirement as a means of laying off workers within five years of retirement age. In addition, the Urban Employee Pension programme permits early retirement for health reasons or hazardous work conditions with an employer's sponsorship. However, evidence from the China Health and Retirement Longitudinal Study (CHARLS) suggests that early retirement is granted quite liberally.
Migrant workers struggling to get a pension as some companies delay payments
On the other hand, migrant workers receive much lower pension payouts, which leads to concerns about having enough money to support themselves and their families in retirement. As a result, many of them continue working past the retirement age, sometimes until they are physically unable to work. This accounts for the significant disparity in retirement rates between urban and rural workers.
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The recent protests within the manufacturing sector highlight the inadequacy of the social security system in providing migrant workers with sufficient coverage and compensation when faced with factory closures in China. CLB reported on several cases of workers’ protests, such as in Yangzhou and Zhongshan. Workers went on strike at factories that had decided to relocate and were unwilling to pay workers at first. The Yangzhou factory was scheduled to move to Indonesia for cheaper labour, and the Zhongshan factory was scheduled to move to Guangxi province.
In the Yangzhou Baoyi case, China Labour Bulletin found that the Baoyi factory violated several provisions of China’s labour laws. This included non-payment of social security and provident housing funds. On December 8, 2023, the CLB contacted the staff of the Social Security Bureau, who stated that unpaid social security at Baoyi is considered “a historical problem” with "reasonable and legitimate reasons" for not enforcing the law on this matter.
Meanwhile, the Baoyi factory, which knew it would have to lay off its workers, decided to lower workers’ wages in its final year of operation so that the compensation package awarded to workers would be significantly less costly for them.
In the Zhongshan case, the factory went even further, as workers recalled that the human resource department at Wing Ming factory used all kinds of tactics to get them to “voluntarily resign”. The factory has a long history of not paying social insurance fees for workers, too, and this is even used to put workers into a dilemma: workers have to choose between receiving only a small amount of due economic compensation or unpaid social insurance benefits. Both of the choices are against Chinese labour laws, but workers have to choose one of the two. As a Wing Ming worker who signed the resignation agreement in June 2023 once wrote,
“We went to the government for help, but they are not helping. No one is enforcing the law. The labour bureau even stands with the factory. As migrant workers, we can do nothing but be treated like this here, where our social insurance policy is not enforced locally.”
Therefore, most migrant workers are extremely fortunate if they happen to be in a factory, which contributes to the social insurance system legally, and they are guaranteed they can get a pension when they reach retirement. Many migrant workers are content with receiving a pension, even though they have little information about how their contributions are calculated and the payouts they can expect over time. This lack of knowledge means that migrant workers are unaware of how they can maximise their benefits from the pension system. They often settle for making minimum contributions over 15 years and receiving a relatively low pension in return. Workers are rarely consulted, and the official union does not encourage enterprise-level collective bargaining, so they may not be able to argue for more benefits.
Lack of pensions: the issue of labour contracts and the hukou system
Migrant workers are still not receiving equal coverage under the urban pension system. Data from the Ministry of Human Resources and Social Security showed that in 2017, only 22% of migrant workers had joined the urban workers’ pension scheme—a higher level of pension system in contrast to the national basic pension system in China. Since 2017, no new data has been released by the Department.
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Some migrant workers do not have a labour contract, which means they are not entitled to employer contributions to their pension scheme, and their work will not count towards their 15 years of seniority. The National Bureau of Statistics has not published figures for labour contract rates for migrant workers since 2017, but at that time, they estimated that only around 35.1% of migrant workers had an employment contract. Without a contract, employers of migrant workers have no legal duty to pay into their employee's pension funds, meaning that migrant rural workers suffer low pension coverage or no coverage at all. This problem is particularly acute in sectors such as construction, where many workers are informal and without contracts. For example, in Zhengzhou, many workers struggle to find work in the construction sector, often having to resort to waiting underneath a bridge waiting for construction company trucks to come around so they can enquire about work and how much they would be paid for a day’s labour. Employers know that due to the shrinking labour market and high demand amongst migrant rural workers for these construction jobs, they can get away with providing extremely low or no pay and provide no legal rights of social security coverage, leaving workers alone to make enough by themselves.
Such precarious and informal work often carries no legal protections whatsoever, meaning that these workers have no pension coverage nor are even considered to be employed with labour relationships, especially given that many of the workers in this example are working beyond the legal retirement age. This lack of pension coverage or employer contribution from their jobs means that when migrant workers do retire, they also often receive meagre sums of money, which are nowhere near enough to live off. In 2020, these figures were as low as 174 yuan, equivalent to $25 dollars per month, drastically lower than the 3,326 yuan received by an urban worker each month.
Second, migrant rural workers also face low social security coverage because of the hukou system, which is the system of registering a residence to access social security, health and education services, often systematically excluding them. At the end of 2022, while China’s urban population accounted for 65% of the total, only three-quarters of the urban population had an urban hukou, meaning that a quarter of workers in urban areas, estimated by Tsinghua University to be around 200 million, are not granted the right to access these services.
Moreover, not all migrant workers are equal–-some migrant workers face more discrimination than others. For example, in the Southern city of Guangzhou, one of the top destinations for migrant labour since China’s ‘opening up’, nearly all of the one hundred thousand hukous granted each year are granted to residents of the surrounding state of Guangdong, while excluding workers from neighbouring provinces such as Hunan and Sichuan. In China’s two most populous cities, Beijing and Shanghai, measures have been implemented to deter migrant workers from moving there in order to achieve their goals of capping their populations to 23 million and 25 million, respectively.
Even urban workers with good pension coverage have experienced an increase in their own pension contributions since 2016, while their employers' contributions have decreased from 20% nationwide to around 16%. Due to the rising contribution fees, some workers may opt for commercial insurance to supplement essential insurances like medical coverage.
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In addition, many service workers in China’s ever-growing gig economy have little coverage under the current pension system. Much like migrant workers, many of these flexible workers either work without a contract or, if they do, are often not afforded the rights to which they are legally entitled. For example, estimates by the International Labour Organisation show that between 2018 and 2021, the number of food delivery workers with a formal labour contract halved from 43.3% to just 20.7%, while the number of workers who had no contract at all reached 41.6% in 2021.
As a result, food delivery workers have a very low rate of social insurance coverage (around 50% in 2021). Also, a study on platform-based workers in the cities of Beijing, Chengdu, and Hangzhou showed that only 20% of workers were covered by the state-supported pension, without which the employer had no legal need to contribute to the workers' pension. Therefore, service workers, much like migrant workers, face extremely low coverage rates, which impacts their faith that the retirement system will cover their needs when they retire.
Age discrimination against old workers
In addition, many people in China find it difficult to find a job in a factory after the age of 40, and if they have not reached 15 years of seniority, they will be unable to claim retirement benefits on these grounds. Age discrimination against older workers in the labour market is a serious issue in China (See workplace discrimination in China). For example, even those over 35 have difficulties finding an IT job, and factories are often reluctant to hire workers over 40.
Young people, too, have reacted negatively to the prospect of raising the retirement age, mainly due to the fear of competition in the job market. Amid China’s largest youth unemployment in years (15.9%), many young people and graduates feel that by expanding the labour pool to over 60s, they may face even more competition, further impacting their dwindling job prospects.
Looking into the future
Raising the retirement age alone won't fix the social security system's problems. A successful social insurance system needs transparent revenue management to build contributor trust and ensure future benefits.
While the government is starting to address the challenges of a decreasing workforce and an ageing population, simply raising the retirement age without reforming the social security system is insufficient. As we have seen, age is not always the best predictor of retirement. The assurance that individuals will receive a sufficient pension to meet their needs plays a more significant role. Therefore, the focus should not just be on delaying the retirement age but on ensuring that workers have confidence in the system to provide for them.
If the government wishes to proceed with their plan to delay the retirement age to 65, it must first consider several important things. Most importantly, the government must actually consult workers and work together with the ACFTU to bring these voices to the table so that workers can have a say in the policies that affect their lives. We recommend that both employees and employers come together to negotiate the contribution fee and pay, which should ideally lead to the reversal of the low rates of employer contribution so that a fully-funded universal pension scheme can be created that redresses vast imbalances between workers, whether urban, rural or migrant. In addition, there must be significant reform of the discriminatory hukou system so that workers are equally granted access to pensions and other social services on the same terms, regardless of whether they are migrant or urban workers. Finally, on a broader scale, the government must step in to discipline employers to offer employment contracts to all workers with all the necessary benefits and provisions that they are legally entitled to.
This article is a collaboration between China Labour Bulletin and the SOAS student placement programme, with contributions from Oscar Underhill.