Raising Hong Kong’s birth rate is an economic imperative

Hong Kong's policymakers have recently acknowledged the urgent need for demographic sustainability through various policy initiatives. These include extending financial support for families and expanding the newborn bonus scheme. However, the fertility debate should not be solely focused on the size of the bonus. The more pressing concern is whether Hong Kong can maintain its dynamism and competitiveness as its younger population continues to decline.

Low fertility rates have broader implications beyond social concerns, including their impact on innovation. Innovation hinges on a strong pipeline of talent, including scientists, entrepreneurs, and skilled professionals. In an era of artificial intelligence, the demand for highly skilled workers is more critical than ever. Without a sufficient talent pool, economies risk falling behind in an AI-driven future.

The falling fertility rates in advanced economies can be attributed to the differing costs and benefits of raising children. While the benefits of having children are widely shared, the costs primarily fall on individual families. These costs encompass housing, childcare, education, and career interruptions. Although having children remains a personal choice, governments, employers, and institutions play a crucial role in shaping the conditions under which families make this decision.

Hong Kong's efforts to address demographic sustainability are commendable, but financial incentives alone may not be sufficient. Parents also face challenges such as housing affordability, access to childcare, and the impact of family responsibilities on career progression. A more comprehensive approach is necessary, moving beyond one-off incentives to long-term policies that provide sustained support throughout childhood.

Singapore and Japan have taken steps in this direction, offering support from birth until the age of 17 and increasing the allowance for third and subsequent children. The key principle is to provide a long-term, predictable support system for families. However, financial assistance should be just one component of a broader ecosystem that includes affordable childcare, parental leave, family-friendly housing policies, and a supportive labour market.

Addressing the perceived conflict between professional success and family formation is also crucial. In expensive and competitive cities like Hong Kong, young professionals often face a difficult trade-off between their career aspirations and starting a family. Women, in particular, bear a disproportionate share of caregiving responsibilities and may experience career disruptions after becoming parents. High housing costs exacerbate these challenges.

Employers must play a significant role in this conversation. Family-friendly workplace policies, such as flexible working arrangements, meaningful parental leave, and clear pathways for career progression, can help talented employees remain engaged without forcing them to choose between their professional ambitions and family life. In an ageing society, businesses that successfully support families will be better positioned to attract and retain skilled workers.

Ultimately, demographic policy is intertwined with economic policy, representing a long-term investment in human capital. Hong Kong's ability to attract global talent will depend on its capacity to create a more family-friendly environment that supports both professional ambition and family life. Addressing low fertility is not an immediate fix but a gradual process that requires sustained government leadership, supportive policies, and community engagement.