For country's and old-timers' sakes

2020-12-17 12:10:01

Reforms and development goals of the 14th Five-Year Plan need to fully consider the aging population MA XUEJING/CHINA DAILY China's low birthrate and slowing population growth are expected to continue into the 14th Five-Year Plan period (2021-25), with its population likely to peak and start negative growth earlier than previously predicted. This trend poses severe and far-reaching challenges to the country. The low birthrate and slow population growth is an inevitable trend. The natural population growth rate of China was 3.34 newborns per 1,000 people in 2019, the lowest level since 1960. During the 14th Five-Year Plan period, the population growth will further slow, with the total population nearing its peak and aging rapidly. This will present multiple challenges. A growing dependency ratio-the ratio of those outside the labor force, such as seniors and children, compared with those in it-will drag down the country's economic growth. The working-age population, those aged 15 to 59 years old, began shrinking since 2012, and those aged 15 to 64 started negative growth since 2014. As a result, the dependency ratio has been rising. A rapidly aging population leads to a remarkable drop in new labor force. It also results in slower growth in the productivity of labor. Accordingly, the potential growth rate of GDP has dropped from around 10 percent in 2010 to 7.6 percent during the 12th Five-Year Plan period (2011-15), and further to 6.2 percent during the 13th Five-Year Plan period (2016-20). The number is expected to hit 5.5 percent during the 14th Five-Year Plan period. An aging society has negative impacts. It causes a declining labor participation rate. As the delayed retirement has not been rolled out as scheduled, and many workers are quitting the labor force even before reaching the age of retirement, the trend of labor shortage has been aggravated, putting greater pressure on the pension system. Moreover, the growth of human capital will decelerate. The older the working population, the lower the education level it has. Senior workers are disadvantaged in the job market, with their employability and working skills not sufficient to meet the requirements of the new technological revolution and an upgrading industrial structure. An aging society also means lower incomes and weaker consumption ability, hampering the country's efforts to fully tap the consumption potential of its large population. China will gradually enter a moderately aging society during the 14th Five-Year Plan period. The growth of the population aged 65 or above will slow down temporarily during that period, thus putting relatively lighter pressure on care services for the elderly. However, the increase in the aging of population will accelerate after a short period: the number of those 70 or above, which account for 39.9 percent of the population aged 60 or above in 2020, is projected to hit 44.3 percent in 2025, and further rise to 55.2 percent in 2040. Therefore, we should make full use of the window phase of the 14th Five-Year Plan to prepare for the rapidly aging society. The strategies in response to the aging population involve birth policy, retirement policy, education and training system, social pension insurance, income distribution and senior services. China's authorities have made related plans in the proposals for formulating the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through 2035. The related reforms and development goals require top-level design, systematic integration and coordinated advancement. The following areas of policy should be prioritized in the 14th Five-Year Plan. First, to slow the declining birthrate by rolling out a more supportive fertility policy. It is almost impossible for China's total fertility rate to recover to the replacement level of 2.1 children per woman. But the country should strive to pull the rate up to 1.8 by reforming its family-planning policy to promote balanced population development and by providing more public services to reduce the cost of raising children, thus fostering a children-friendly environment for young couples. Second, to increase the labor participation rate of the elderly and draft a road map for postponing retirement. A pension payment system that encourages old-aged people to work should be devised, and job training should be enhanced to boost the working skills and employability of seniors, thus making gradually postponing retirement more feasible. Third, to roll out policies that support the eldercare industry and mobilize resources and the willingness of the whole society to build an elderly-friendly society. The formation of a certain demographic structure is often the result of targeted policies and development path. Therefore, many senior-related industries and enterprises are public goods and need the government's financial support. In addition, since the aging of the population is inevitable, the labor force of seniors should be used in socioeconomic development while their needs should be satisfied. Senior-related industries should be fostered as a new economic growth driver. Last, basic public services should be provided with the aging population fully taken into consideration to realize an equitable and sustainable payment of the social security system. Social pension insurance funds should bring in more funding sources, including the maintenance and appreciation of pension funds, and the transfer of State-owned assets to fill in the deficits of pension funds, to make the pension system sustainable in the context of a rising elderly dependency ratio. In addition, a long-term senior care insurance system should be built, and enforcement should be enhanced to eliminate discrimination against senior job seekers, thus encouraging more elderly people to work. The author is the vice-president of the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.