Vietnam to increase retirement age to solve future labour shortages

The retirement age increase is expected to start from 2021. The adjustment is considered necessary to deal with the impact of population structure change and the rapidly aging population. However, the process should be implemented following a specific roadmap to avoid a shock to the labour market.

Female workers at a garment factory in Luong Son Industrial Park, the northern province of Hoa Binh. Photo: (NDO/Dang Khoa)
Female workers at a garment factory in Luong Son Industrial Park, the northern province of Hoa Binh. Photo: (NDO/Dang Khoa)

As forecast, there will be an elderly person among every two Vietnamese people of working age by 2055. In 2000, the number of people entering the working age was 1.7 million, 3.4 times higher than the number of 500,000 people out of the work force. By 2035, the number of people in the working age will only be 1.2 times the number of those who leave the working age (1.5 million compared to 1.26 million people). Deputy Minister of Labour, Invalids and Social Affairs Doan Mau Diep said that increasing the retirement age is unavoidable as Vietnam is facing the aging population issue. Without adjusting the retirement age, the country will face labour shortages in the near future.

Therefore, the adjustment of the retirement age will be included in the draft Labour Code (revised) and submitted to the National Assembly (NA) for further discussion, with two proposed plans. In Option 1, the adjustment is set from 2021, with the retirement age increased by three months each year for men until reaching age 62 and six months for women until the age of 60. Thus, the retirement age of men will reach 62 by 2028 and 60 for women by 2030. In Option 2, from 2021, the retirement age increase by three months per year will be applied for men until reaching 62 and four months for women until 60. Thus, the retirement age for men will be 62 by 2028 and 60 for women by 2035.

From experience of other countries in the world, according to Diep, the adjustment should be made under an appropriate roadmap regarding economic growth factors and the issues on employment and unemployment, population structure, gender equality, and social insurance, among others. Therefore, the adjustment of the retirement age should have a long-term vision but must be implemented urgently following the roadmap in order to not shock the labour market.

Regarding the starting time for the retirement age increase, Deputy Chairman of the NA’s Committee on Social Affairs Bui Sy Loi said that 2021 is reasonable because this mark is associated with social insurance and wage reform, but it is necessary to be careful when adjusting the Labour Code. According to Loi, without proper steps, Vietnam would face disadvantages when it is in the early stage of the aging population. Without handling this problem, there will be a shortage in human resources.

According to the General Statistics Office, the working age population (aged 15 to 64) in Vietnam is projected to decline sharply from 2030. Therefore, it is necessary to select the time to increase the retirement age to ensure the balance of the workforce. The increase is the common trend of all countries with an aging population structure to match their socio-economic, demographic and health conditions.

In the face of concerns that the proposal to increase the retirement age amidst the rapid development of the fourth Industrial Revolution would increase the unemployment rate and make it hard for young workers to find a job, Loi said that, for many years, the retirement age has not changed since the average life expectancy of Vietnamese people was under 50 and increased to 74 until now. In fact, Vietnam has adjusted the retirement age for those working in the education and health sectors, such as professors, doctors and scientists up to 65 or 70 years old. For labourers working in hazardous and dangerous environments or in the field of production and business, the retirement age has in fact been reduced by three to five years compared to the average.

According to Loi, the increase in the actual retirement age does not affect the employment opportunities of young people, because the current training is different from that in the past, as currently, training programmes are developed under market demand, making those who have real ability easily finding jobs, even creating jobs for themselves.

In the context of population aging, countries around the world have plans to adjust their retirement age, such as Indonesia which is on the way to adjust its retirement age from 55 to 65, Malaysia from 60 to 65, and the Republic of Korea from 62 to 65 by 2034.