China working-age population shrinks, presenting pitfall for pension plans

BEIJING (Reuters) - China’s working-age population fell to its lowest level since 2009 last year and was below a billion for the first time since 2010, data released on Wednesday showed.

Slowing population growth and a shrinking pool of workers present a challenge to China’s economic growth as well as its state-run pension program.

China’s total working-age population, or the number of people aged between 15 and 64, was 998.3 million people last year, compared to 1.0026 billion at the end of 2016, data from the National Bureau of Statistics showed, the biggest decline since the working-age population began falling in 2014.

The number of people 65 or older meanwhile increased to 11.4 percent of China’s population of 1.39 billion people, up from 10.8 percent in 2016.

China’s rapidly aging population has led to a growing shortfall in the nation’s pension scheme. Many of China’s provinces only have enough money to pay less than one year’s worth of benefits.

Holes in local pension funds are often filled through transfers of central government funds, and China said in November that it would begin a pilot program to transfer shares in state-owned firms to social security funds.

The aging population comes as births in the country fell by 3.5 percent last year despite a 2016 move to relax China’s “one-child policy” amid concerns about the rapidly aging population.

Wednesday’s data showed total urban employment increased by 10.34 million people last year as more rural residents moved to cities, though the figure was less than the often-cited statistic of 13.51 million new urban jobs being created last year.

The total number of employed people in China - which includes rural and urban residents - grew by just 370,000 people last year, a much smaller increase than in previous years, the data showed.

With a shrinking potential labor force and companies still hiring, per capita disposable income last year rose 7.3 percent, faster than the 6.3 percent increase in 2016.

Reporting by Elias Glenn and Stella Qiu; Editing by Nick Macfie