DIGIVESTASI - The Chinese government has decided to raise the retirement age, the first such move since 1978, in order to cope with a declining workforce. According to a report by Bloomberg, Monday (16/9), China's parliament approved a plan to delay retirement by five years for workers.

This change will make male workers retire at age 63, up from age 60, while female workers will retire at age 55, from 50 years previously. For women in management positions, the retirement age will be 58, up from 55. 

The reform is scheduled to take place over 15 years starting January 2025, giving more people the opportunity to work longer. This is expected to boost productivity in the face of the challenges of an aging population, although it has the potential to fuel public discontent amid the slowing pace of economic growth over the past five quarters.

“The retirement age adjustment will be gradual, taking into account possible negative impacts and adjusting carefully,” said Greater China Economist Michelle Lam.

The decision triggered a surge in shares of companies that provide health and elderly care services, such as Shanghai Everjoy Health Group Co, which rose up to 10 percent, and Chalkis Health Industry Co and Youngy Health Co, which increased more than 6 percent.

Shen Meng, director of Chanson & Co Investment Bank, said that with a higher retirement age, health problems may increase, so the need for elderly care institutions will become more urgent.

Although China's retirement age is among the lowest in the world, life expectancy in the country has increased rapidly in recent decades. A larger tax base and delayed access to retirement benefits will ease pressure on the government amid a rapidly increasing elderly population.

“This measure is designed to adjust to the new demographic development in China and maximize the utilization of human resources,” according to a decision by the Standing Committee of the National People's Congress.

The approval comes after the Chinese Communist Party's announcement in July that the retirement age increase would be voluntary and flexible.

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