China’s workforce could rise rather than fall

That is the subject of a new FT article by Steve Johnson.  I’ve already covered this on MR, but here is a recap of some of Johnson’s points:

1. Official pension ages in urban areas are 50 for blue-collar women, 55 for white-collar women and 60 for men.  Those could be raised by the government thereby boosting the labor force.  For instance, in terms of actual practice, at age 60 only 55 of urban Chinese men are still in the labor force, and just one-third of urban Chinese women are still in the labor force.

2. Chinese pension policy penalizes late retirement and this easily could be changed.

As Johnson writes: “…if China adopted measures to retain older workers in the labor force, its working population would barely fall at all until at least the mid-2030s.”

With more women working, China in 2040 might have a labor force as large as it has today.  If the retirement issue and the gender issue are both solved, China’s labor force in 2040 likely will be 10 percent higher than it is today.

So the common meme of “the Chinese labor force is about to start shrinking” doesn’t really have to be true.  The Chinese economy has many problems, but I think this one is overrated.  And we haven’t even talked yet about possible productivity increases.


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