China loses more than 40 million workers as population ages

THE number of working people in China has fallen by more than 41 million in the past three years, reflecting both the Covid-19 pandemic’s toll on the economy and a decline in the working-age population.

Some 733.5 million Chinese people were employed in 2022, according to the country’s statistics bureau. The figure is down from 774.7 million in 2019.

Yu Jiadong, a vice-minister of human resources and social security, told a briefing on Thursday (Mar 2) that the decrease in China’s working age population was driven by rising numbers of retirees, adding that China has “the largest population and labour force of any developing country”.

Stuart Gietel-Basten, a demographer at the Hong Kong University of Science and Technology, said the decline in workers reflects factors such as higher youth unemployment due to the pandemic, as well as a shrinking number in the “classic age group of the working-age population”.

The number of people in China aged between 16 and 59 has been gradually declining since 2012. Over the last three years, the number in that group fell by 38 million to 857.6 million – a much more rapid drop than in previous years.

Lu Feng, a labour economist at Peking University, said that demographic change was the “driving factor” in 2022’s employment drop. This comes as the population reaching the age of 60, a common retirement age in China, “increased dramatically”.

China’s economic growth is expected to accelerate this year, due to the end of pandemic restrictions under the zero-Covid policy and a sharp drop in infections.

Larry Hu, China economist at Macquarie Securities said that the number of employed people in China “could rise this year as people return to the workforce” as a result. He added that the figure “will remain on the structural downtrend due to the ageing population”.

The latest data is likely raising pressure on Beijing to accelerate unpopular plans to raise official retirement ages.

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China’s retirement age has remained unchanged for more than four decades at 60 for men and 55 for female white-collar workers, even as life expectancy has risen. China experienced a baby boom during the 1960s, meaning a large cohort of workers will fall out of the 16-59 age group over the course of this decade.

The country’s ruling Communist Party has listed retirement age reform among its key economic tasks for the year. More details on the reform plans may be provided this month, when the annual government work report is presented at the National People’s Congress, an annual meeting of China’s rubber-stamp parliament.

The strength of public opposition to any changes was highlighted last month, when a research report from Citic Securities forecasting a rise in the retirement age for women starting in 2025 sparked widespread criticism online.

China’s workforce has also become significantly more urbanised over the last decade, according to China’s statistics bureau. Economists see the trend as positive for economic growth. Last year, about 63 per cent of workers were employed in urban areas, up from 50 per cent a decade earlier.

Workers in China are becoming more productive as well. Labour productivity – defined as gross domestic product produced per worker – increased by 4.2 per cent in 2022, the statistics bureau said. That has slowed, though, from rates of around 6 per cent per year reported in the 2010s. BLOOMBERG