China will be experiencing an explosion in its population of senior citizens over the next 20 years; they are the progeny of the pre-family planning era. In 2010, about 115 million people in China were 65 or older, by 2030, this number is expected to hit 240 million.
As large-scale enterprise transformations took place in the late 1990s, more and more workers were laid-off as they reached the age when they were covered by pensions. But these pensions were mostly the lowest of their kind, especially when compared with the pensions provided to those retiring from State-owned enterprises and work units.
Indeed this generation of urban dwellers, born in the decade after New China was founded in 1949, has been truly unlucky. As children they suffered malnutrition during the famine between 1960 and 1962 and they lost their schooling during the “cultural revolution” (1966-76). The turning point in their lives came in the late 1970s when most of them were assigned jobs after returning home from the “Go to the Countryside” campaign initiated by Chairman Mao Zedong in the 1960s.
If migrant workers are the links between urban and rural China, these laid-off workers are the glue that holds the middle and lower urban social layers together as they frequently care for their children and their own parents.
Today they are still struggling make ends meet in their daily lives. The high cost of living and their children’s difficulty in finding jobs and housing make things even worse for them. But the main problem they face is getting a job. Less educated than their children, it is harder for these laid-off workers to adapt to meet the needs of today’s job market.
“You are as old as you feel. I cannot simply live the life of a pensioner. I need to keep both my body and my mind active. That’s why I think it is important for me to keep up with the development of society,” said Du Zuqiu, who is now 55 years old, she was laid-off from her job as a welder at Ji’nan Painting Factory in Shandong province in the mid-1990s. She is now self-employed and is teaching herself English.
She says that many of her colleagues are also keen to move with the times and find a place for themselves in society.
Thanks to a number of subsidized employment and training program organized by governments of various levels, many laid-off workers adjusted painfully and quickly to the challenges of supplementing their meager pensions.
However, the demographic challenge presented by this sector of society could well slow China’s economic growth more than is currently expected. Therefore, the problem of laid-off worker has become an issue of social governance and finance.
In developed economies, the retired population generally has considerable purchasing power, thus, providing a cushion for public financers when they draw up the social security framework. In contrast the aging of such a huge group of poor urban residents in China clearly forecasts an impending shortfall for the Chinese government’s pension funds.
China has yet to build a national pension system and how demographics will shape China’s finances is still an unanswered question.
The author is an editor of M4.cn. He can be reached at liyang@m4.com.cn.