Addressing Aging through Institutional Designs
Feb 23-2022
A range of issues related to institutional designs still needs to be tackled for China to better cope with the challenges posed by an aging population, says Prof. Lei Xiaoyan of the NSD in an exclusive interview.
She’s PKU Bo Ya Distinguished Professor and Director of PKU Center for Healthy Aging and Development (CHADS). The interview is part of a joint production by the NSD and Tencent News which sets out to explore the importance of long-termism in the context of new development patterns.
China’s elderly residents, aged 65 and above, numbered 190 million in 2020 and saw their proportion of the total population shoot up from 8.9% in the 6th national census to 13.5% in the 7th. Meanwhile, the overall fertility rate dropped to an alarmingly low level of 1.3% in 2020.
This phenomenon, termed ‘getting old before getting rich’, has led to two major concerns, says Prof. Lei. One is the negative impact on economic development due to less labor supply, decreasing capital accumulation, and alterations to economic structure. The other is the escalating pressure on pension and care for the elderly.
Prof. Lei believes that the development of smart technologies can go some way in making up for insufficient labor supply – particularly in rural areas where the issue is much more acute than in cities - and creating care services for the senior contingent. China’s adjustment to its family planning policy also works to counter the adverse impact of aging and low fertility. Furthermore, she stresses the necessity of designing a flexible system which allows the elderly to decide if they would continue to work after retirement.
Both the pension system and Medicare system are in need of reforms, says Prof. Lei. The pension system, currently on a pay-as-you-go basis, should be molded into an accumulative system in which people can build up their retirement pots over their working life. She cites a credible proposal which shows that the government can utilize the capital of SOES to fill the expected pension shortfall in the transitional period. As for the Medicare system, which has been making progress in leaps and bounds, what still needs to do includes tackling over-expenditure and prioritizing healthy aging.
On the fertility front, many couples are deterred by the enormous expenses of raising and educating children. Childbearing women are particularly ‘punished’ in the form of poor employment prospect. Rather than extending maternity leave, which will simply aggravate employers’ discrimination against women, Prof. Lei proposes a longer paternity leave paid for by the government. Companies should also be encouraged to allow employees with young children to work from home on some weekdays, as has been proved viable in the pandemic period, thanks to the development of digital technologies.
