Vietnam unveils 'baby bonus' after scrapping two-child policy

HANOI: One year after lifting its long-standing two-child limit, Vietnam is offering incentives for people to have more babies as the communist country risks getting old before it gets rich.

A new population law and regulations coming into effect Wednesday extend maternity leave from six to seven months for mothers having a second child as well as offering financial help.

If Hanoi residents Nguyen Kim Bich and her husband have a second child, she will get an extra month of maternity leave, free prenatal screenings and a small cash bonus.

“I could stay at home one more month with the baby, and my husband could stay home some more days,” the 32-year-old said as her young son romped in a colourful pit of plastic balls.

The new regime subsidises prenatal and newborn screenings and establishes one-off cash bonuses of up to $228 — two-thirds of the monthly average salary — for mothers who meet certain criteria.

“This is a significant shift in approach,” said Pham Thi Lan, head of population and development at the UN Population Fund (UNFPA) in Vietnam.

“We are moving from controlling family planning to focusing on population development.”

The change, in a country where communist party members faced sanctions for having a third child until last year, comes as the demographic picture darkens.

Soaring life expectancy and declining birth rates have turned Vietnam into one of the fastest-ageing countries in the world.

These trends reflect the development successes of recent years, but economists warn they could lead to labour shortages and strain the social safety net.

The new population law aims to slow the demographic shift.

‘Major slowdowns’

Vietnam’s preference for two-child families dates back to the 1960s, when communist authorities in the north sought to curb explosive population growth during the war.

An official limit was adopted in 1988, but enforcement was never as strict as in neighbouring China, where sterilisations and forced abortions accompanied a one-child policy lifted from 2016.

Today, Vietnam is not yet locked in a demographic death spiral like South Korea or Japan.

Its birth rate is below the replacement level of 2.1 children per woman, but at 1.93 is robust compared to most developed nations.

Life expectancy meanwhile has risen to nearly 75 while the share of the population over 60 has ticked over ten percent.

By the middle of the century, the over-60 cohort will make up 25 percent, and the population will begin to shrink, according to government projections.

What worries economists is that this shift is happening at an earlier stage of development than in other rapidly ageing countries.

Vietnam is among the fastest-growing economies in Asia, but it is still relatively poor.

GDP per capita is around $5,000 — half of Japan’s when its birth rate matched Vietnam’s in the early 1980s, and that is without adjusting for inflation.

That means Vietnam will have “less time to adapt to an aged society than many advanced economies had”, the World Bank warned in a 2021 report.

The country has a “narrow window” for reform before facing “major slowdowns in growth”, it said.

‘No way’

Vietnam’s leaders have framed the new population law as one answer to that challenge, touting it as a first in the region.

UNFPA’s Lan welcomed the legislation, saying it “addresses the current demographic shift” and empowers couples to make their own reproductive decisions.

However, she acknowledged the limitations of one-off benefits like cash bonuses, saying that continuous support through child-rearing is often necessary to change parents’ minds.

Without more “comprehensive support”, high housing and childcare costs will continue to “hinder people from fulfilling their desire to have children”, she said.

That tracks with one recent government survey, in which 73 percent of married respondents said their wages influenced their decision to have children.

Tran Minh Anh, 24, who earns about $380 per month as a cashier in Hanoi, felt similarly.

“I will not have any kids at all,” she said, adding it was “too much pressure, financially and mentally”.

“How can I take care of one more person? No way!”