This City Offers New Parents $2,500 for Having a Baby: A Welcome But Insufficient Boost

In an attempt to address its declining birth rate, Hong Kong plans to provide new parents with a payment of over $2,500. However, many residents in the city, known for its high cost of living, argue that this amount barely covers a month's rent. Hong Kong Chief Executive John Lee Ka-chiu announced this initiative during his recent annual policy address, stating that HK$20,000 ($2,556) will be given to the parents of each baby born until 2026. This is part of the city's efforts to combat the persistently low birth rate, which currently stands at a record low of 0.9 births per woman, far below the 2.1 required for a stable population.

Lee announced a range of financial measures, including reducing the home buyers stamp duty by half, as he emphasized the significance of childbearing as a significant life choice. This additional assistance complements the existing tax incentives for new parents, which provide annual tax deductions for every child, along with an extra deduction for newborns.

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Despite seeming generous, the handout provided falls behind the incentives available in other East Asian countries that are also grappling with low birth rates.

In Singapore, for example, with a birth rate of 1.05, parents are eligible for an $8,036 handout for both their first and second child, and $9,497 for the third child. Additionally, they receive four weeks of paternity leave (up to 16 weeks for maternity leave), unpaid infant care leave, and tax relief for working mothers.

In South Korea, the monthly stipend for newborns, currently at $518, is projected to increase to $740 in the upcoming year. As for Japan, parents receive a monthly allowance of $107 for each newborn until the child turns two, and $66.7 per month for children aged three to senior high.

1 months rent, 3 months nursery

The majority of parents interviewed by CNN expressed doubt that the new policy would sufficiently motivate them to have additional children, emphasizing the exorbitant cost of living in a city consistently ranked among Asia's most expensive destinations.

Ken Lau, a father of one who is considering having a second child, expressed his disappointment, stating, "This amount won't even cover my mortgage for one month, let alone my gas and electricity bills."

Kristy Chan, a mother with one daughter, suggested, "Instead of a single handout, how about providing one per year?" She believed that this initiative would have minimal impact on her decision to have another child.

The average monthly rent for a 500-square-foot flat with two bedrooms in Hong Kong is approximately $2,253 this year, which is more than 90% of the cash that the government plans to distribute. With exorbitant home prices, steep interest rates, and increasing living expenses for items such as infant formula and diapers, numerous couples find the idea of starting a family overwhelming.

This photograph, captured on November 3, 2019, depicts a panoramic scene of parents and participants at a matchmaking event in Tokyo. Approximately a quarter of the Japanese population between the ages of 20 and 49 remain unmarried, as per government statistics. Despite expressing a desire to marry, individuals within this age group encounter difficulties due to outdated societal attitudes and growing economic pressures. Experts assert that these factors compound the challenges of entering into matrimony. (Photo by Toshifumi KITAMURA / AFP) / TO GO WITH Society-marriage-Japan-gender-family,FEATURE by Kyoko Hasegawa (Photo by TOSHIFUMI KITAMURA/AFP via Getty Images)

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Lau stated that for those with mathematical skills, it is evident that this approach is ineffective.

Kim Yeung, a full-time mother who has decided against having another child, believes that the assistance provided would approximately cover three months' worth of nursery fees for her 2-year-old son. She mentioned that the average cost amounts to $766, but the most prestigious nurseries can charge more than twice that amount.

Education in Hong Kong is subsidized from kindergarten to senior high school, but nursery, which refers to the year or two prior to kindergarten, is typically not included.

In both Hong Kong and other cities in China, it is common practice to engage the services of a confinement nanny, also known as a "pui yuet," during the first month after giving birth. The confinement nanny assists in preparing meals and taking care of household chores to support the mother's recovery. However, the government subsidy does not provide substantial coverage in this case either.

"Hiring a confinement nanny would have already cost the entirety of $2,556," Yeung said.

The bigger picture

According to Professor Paul Yip Siu-fai, an expert in population health at the University of Hong Kong, providing a single cash handout would not effectively address the long-term financial worries of parents. He suggests that when it comes to having children, there are three aspects to consider: the process of childbirth itself, the upbringing of the child, and their education.

Yip emphasized the necessity for Hong Kong to provide further support to parents during the later stages, specifically through the promotion of parent-friendly office environments. These environments should incorporate flexible shift schedules, ensuring a more conducive atmosphere for parents. According to Yip, it is crucial to perceive childbirth as a responsibility shared by society, rather than solely resting upon the parents.

Sze Lai-shan, the deputy director of the Society for Community Organization, a non-governmental organization dedicated to helping the most disadvantaged individuals in the city, emphasized the heartbreaking dilemma faced by countless low-income families. These families find themselves trapped between the unaffordability of childcare and the inability to take time off work to care for their children.

Seo Ji Seong, along with her husband Kim Dong Uk, their children, and their dog, are photographed after being interviewed at their residence in Anyang, South Korea, on Sunday, October 9, 2022. A growing number of young individuals in South Korea are opting to forgo marriage and having children due to shifting perspectives on married life and family, as well as concerns about their future. (Photo credit: Lee Jin-man/AP)

South Korea is in need of a greater number of babies and workers. To address this issue, the country is looking towards foreign housekeepers as a potential solution. The Hong Kong government has also made promises to expedite access to public housing for families with children and increase the capacity of public child care services. However, according to Sze, these measures fall short of meeting the requirements.

She urged the government to offer housing allowances and nursery subsidies to improve accessibility to daytime childcare services. Lau, a father himself, supported this call and advised the government to also extend paternity and maternity leave.

Those who desire to have children are not motivated solely by a sum of HK$20,000, and those who consider financial constraints as a barrier will not be swayed by this amount either," he stated.

Lau further expressed the view that the government should focus on devising ways to demonstrate that Hong Kong is an ideal environment for raising children.