The Asian financial hub of Hong Kong has a big problem: Families are having fewer children, if at all. Schools are closing due to a lack of students. And the city is still recovering from a years-long exodus of residents unhappy with political uncertainty and its former COVID controls.
Now, the government is offering a one-off bonus of HKD20,000 ($2556) to new parents in a bid to reverse falling birth rates. The city’s chief executive, John Lee, announced the latest incentives in his annual policy address on Wednesday. The bonus will be available for three years.
“It is imperative that the government set a firm policy direction to encourage childbearing amid our persistently low birth rate,” Lee said during his address on Wednesday.
Public reaction was swift and unimpressed. “It is honestly not that helpful,” one parent told Hong Kong’s public radio broadcaster soon after the bonus was announced. “HKD20,000 would disappear in a blink of an eye.”
The city’s government is offering more than just a check. Lee in his policy address also outlined several other measures to encourage new parents. Families with newborns who are currently queuing for public housing will be given priority by having their wait times reduced by one year. Parents will also be given expanded tax breaks on home loan interest and domestic rents.
Hong Kong is trying to solve a problem that many of its peers have also struggled with for years: How to reverse a steady decline in fertility. (The city’s population ticked upwards in the middle of 2023, with 2.1% year-on-year growth, thanks to new visa schemes for talented migrants and the relaxation of border controls)
Singapore, Japan, and Taiwan have been dealing with a decreasing birth rates for years. Mainland China is also now trying to encourage new births, rolling back population controls as the number of new births sink to record lows.
But even by those standards, Hong Kong’s birth rate is low.
The city’s birth rate has steadily declined between 2016 and 2021, according to a report released by the city’s government in February. In 2021, the latest year recorded, Hong Kong’s birth rate fell to 0.77 births per woman. That puts it in the same territory as South Korea, whose own alarmingly low birth rate made headlines this year. Data from the South Korean government showed the country’s birth rate decreased to 0.77 in 2022. (2.1 is considered the replacement fertility rate to maintain the population in many developed economies.)
Hong Kong’s incentives are small when compared to other Asian economies.
Its new “baby bonus” cash incentive is just slightly more than half of the city’s median monthly household income of HKD 36,200 ($4629) among economically active households.
Starting next October, Japan will offer $100 per month to a household after its first and second child until the age of two, and then continue providing $66 per month until the child completes junior high school. Japan’s government will offer even more money to families that have more than two children.
Singapore’s bonuses to new parents are also far more generous than what Hong Kong announced. This year, the country’s government expanded its baby bonus scheme. For the first and second child, the country’s parents will receive a cash gift of about $8000 for each child, up from a previous amount of $5800. The cash gift increases to about $9400 for the third to fifth child. The cash gifts are in addition to other benefits, such as a separate development account where funds can be used for expenses such as healthcare and pre-school fees.
Yet evidence from these other Asian economies like Singapore reveal that pro-natalist policies don’t seem to work—and that Hong Kong’s minimal offering compared to its peers likely won’t convince anyone to start a family.
Singapore has tried for decades to encourage its families to have children, to no avail, with parents complaining of high living costs, difficulty accessing government-subsidised housing, and expensive childcare. Even the city’s latest round of baby bonuses is failing to convince prospective parents. Singapore reported a fertility rate of 1.04 last year, the lowest in its history.
While one-off payments may provide some relief to couples planning to have children, parents in economies like Singapore often say the amount isn’t enough to offset living expenses or childcare costs. Demography experts believe that cash incentives merely affect when families choose to have children, rather than how many they choose to have.
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