ISE21/20-21

• In Hong Kong, the number of childbirths registered a double-digit decline of 19% within a single year to a 60-year low of 43 000 in 2020, while the total fertility rate ("TFR", i.e. the average number of births throughout the child-bearing age of woman) slid to a record low of 0.87 which was close to the global bottom.^{1Legend symbol denoting TFR is the average number of childbirths during the childbearing years (i.e. aged 15-49) of a woman. See Census and Statistics Department (2020a and 2021a).} There are views in the community that the increasingly acute demographic challenge would warrant the introduction of new childrearing incentives as seen in other advanced places in Asia.^{2Legend symbol denoting Yip, P.S.F. (2014), Lui, C.W.L. (2019) and Youth I.D.E.A.S. (2018).}
• While the recent decline in fertility rate could be in part attributable to social incidents and the COVID-19 pandemic, deep-rooted socioeconomic factors also contributed. The implications of ultra-low fertility will be profound on both the social fabric and local economy, including a projected noticeable shrinkage in the local labour force by some 150 000 or 4% over the next two decades.^{3Legend symbol denoting Census and Statistics Department (2020c).} In the Legislative Council, the subject of encouraging childbirths has been raised on at least five occasions over the past five years.^{4Legend symbol denoting Two Council Questions were raised in March and November 2017, followed by several debates on the "Employment (Amendment) Bill 2019" in July 2020, the Member's motion on setting up a "New Generation Fund" in May 2021 and the Chief Executive's Question Time in June 2021. See GovHK (2017a and 2017b).}
• To support couples who wish to have children, the Government has launched more family-friendly measures since 2015, like lengthening paternity and maternity leaves, raising child allowance and improving the provision of aided childcare places. Globally, some 55 advanced places have put in place fertility-boosting policies. In particular, the relevant policies in Singapore are acclaimed as the "most comprehensive" in Asia by some experts and hence should have a certain reference value.^{5Legend symbol denoting United Nations Population Division (2015).} This issue of Essentials first reviews the latest developments of local fertility trend, recent pronatalist policies and issues of concern. It will then be followed by a discussion of the fertility-boosting measures in Singapore.

Recent fertility trend and parenting-friendly policies in Hong Kong

• Local fertility rate fell to record low in 2020: Live births in Hong Kong largely trended downward after the 1960s, only receiving a brief reprisal between 2001 (when the Court of Final Appeal granted the right of abode in July 2001 to Hong Kong babies born to Mainland nationals) and 2012 (before a zero-quota policy was imposed in January 2013 on obstetric services for Mainland women whose spouses were not local residents).^{6Legend symbol denoting The ratio of these Chinese nationals-born babies in total live births increased substantially from 1.3% in 2001 to the peak at 37.4% in 2011, before easing to 0.5% in 2020. See Census and Statistics Department (2021b).}
• During 1980-2020, the number of local newborn babies plunged by 49% (Figure 1). More specifically, the 43 000 births in 2020 was not only the lowest ever recorded in 60 years, but it also dropped beneath the respective number of deaths (i.e. 49 800) for the first time in local history. TFR has thus halved to only 0.87 during the four decades, also to a record low in Hong Kong and just ahead of 0.84 in South Korea in 2020 (the latter ranked the bottom amongst 217 places in the world in 2019).^{7Legend symbol denoting Census and Statistics Department (2021a) and World Bank (2021).}

Figure 1 - Live births and total fertility rate in Hong Kong, 1980-2020

• Socioeconomic context: There is extensive discussion on major reasons leading to low fertility in Hong Kong, as briefly summarized below. First, local women have either delayed their marriage (with the median age of their first marriages rose noticeably from 24 to 30 during 1981-2020) or increasingly remained in spinsterhood altogether (with the proportion of never-married amongst those aged 40-44 sextupling from 3% to 19% during 1981-2020).^{8Legend symbol denoting Census and Statistics Department (2020a and 2021c).} Secondly, the local work environment is allegedly hectic, rigid and stressful. An international survey ranked Hong Kong as the city with the most "overworked population" in the world, creating hurdles in parenting.^{9Legend symbol denoting Kisi (2021).} Thirdly, local child-rearing and kindergarten-to-university education are costly, with some studies suggesting millions of dollars per child.^{10Legend symbol denoting Bauhinia Foundation Research Centre (2014).} Fourthly, overcrowded and unaffordable housing environment is not conducive to childbirths as well. Local living space is just 15m² per capita, amongst the lowest in the world.^{11Legend symbol denoting Census and Statistics Department (2018).} Fifthly, there are allegations of gender inequality in division of housework and workplace discrimination against women with childbearing aspirations and childcare obligations, dampening their willingness in bearing children.^{12Legend symbol denoting Chen, M. and Yip, P.S.F. (2017) and Rindfuss, R.R. and Choe, M.K. (2015).}
• Adverse implications: Dwindling fertility is bound to aggravate the ageing trend of the population and, at the same time, make the local labour pool more dependent on the inflow of working age persons. Earlier projections from the Census and Statistics Department indicated that the proportion of population aged 65 and above could almost double in 20 years from 18% in 2019 to 33% in 2039, while the size of the labour force could shrink by some 4% or over 150 000 by 2040, compared to the peak in 2018.^{13Legend symbol denoting Census and Statistics Department (2020b and 2020c).} Few labour inputs could retard economy growth going forward, at a time when the community is aspiring to engage more resources into improving people's livelihood.
• Existing measures to encourage childbirths: After a review of population policy in 2015, the Government concluded that childbearing was "a major family decision" and "excessive government intervention may not be appropriate". It further indicated that government policy alone could not "revert the low fertility trend".^{14Legend symbol denoting GovHK (2017b) and Chief Secretary for Administration's Office (2015).} That said, additional measures were launched in recent years to support parenting for couples who wish to have children, such as (a) lengthening paternity leave to five days in 2019; (b) lengthening maternity leaves to 14 weeks in 2020; (c) raising child allowance for salaries tax by 20% to HK$120,000 each during 2015-2021; (d) providing a monthly subsidy of HK$600 for childcare centre service fees since 2020; and (e) increasing the number of aided childcare places by 21% to 33 000 during 2015-2020.^{15Legend symbol denoting Sum of aided standalone child care centres ("CCCs") and CCCs attached to kindergartens.}
• Issues of concerns: However, there are concerns that these measures are too modest to boost childbirths significantly. For tax savings from child allowance, they are limited for households at lower tax brackets and would not benefit families falling outside the income tax net. Regarding paternity leave and maternity leave, they remain far below the averages of 1.4 weeks and 18.1 weeks in the Organisation for Economic Co-operation and Development ("OECD").^{16Legend symbol denoting Organisation for Economic Co-operation and Development (2019).} In addition, given that many family-friendly policies (e.g. flexible working hours and childcare leave) are not statutory, working parents generally find it difficult to strike the desired work-family balance.^{17Legend symbol denoting Leung, L.C. (2016).} In spite of increased provision in recent years, there is an acute shortage of at least 30 000 places of childcare for infants aged below three.^{18Legend symbol denoting Legislative Council Secretariat (2019).} For those couples requiring assisted reproductive technology ("ART") services specifically, they have to endure a long wait for subsidized services in public hospitals (e.g. 11-34 months for the first consultation),^{19Legend symbol denoting GovHK (2017a), Assisted Reproductive Technology Unit (2021) and Centre of Assisted Reproduction and Embryology (2021).} otherwise they have to consider paying for more expensive services in the private sector.^{20Legend symbol denoting ART treatments include artificial insemination, in-vitro fertilization ("IVF"), frozen embryo transfer ("FET") and more. In Hong Kong, IVF could cost more than HK$100,000 per cycle in the private sector.} In face of these inadequacies, many scholars and concern groups call for a review of local pronatalist policies.^{21Legend symbol denoting Yip, P.S.F. (2014), Lui, C.W.L. (2019) and Youth I.D.E.A.S. (2018).}

Pronatalist and parenting-friendly policies in Singapore

• For the 55 governments that promulgated specific policy packages to boost childbirths, their packages by and large shared some core elements (e.g. financial and tax incentives, statutory parenting leaves, flexible workplace arrangement, and child care provision), though they may differ vastly in details.^{22Legend symbol denoting Amongst these 55 places, 27 were from Europe (including France and Germany) and 18 were from Asia (including Singapore and Japan). See United Nations Population Fund (2019).} In the light of the aforementioned local concerns, this short note reviews some of the pronatalist measures seen in Singapore.
• TFR in Singapore used to stay at a high level of 5.76 in 1960, but slid steadily afterwards upon rapid industrialization and improved work opportunities for women. When TFR fell to 2.07 in 1975 (i.e. below the replacement level), the Singaporean Government began to launch pronatalist and parenting-friendly measures.^{23Legend symbol denoting Jones, G.W. and Hamid, W. (2015).} Some of these measures are deemed to be quite unique, as briefly summarized below:  
  
  

  (a)	Special subsidies under the Baby Bonus Scheme: Since April 2001, one-off cash gift totalling S$8,000 (HK$46,560) has been provided for the first and second newborn in five instalments over 18 months, and such bonus would rise to S$10,000 (HK$58,200) for the third and subsequent newborn to progressively offer more support to families with more children.24Legend symbol denoting Ministry of Social and Family Development (2021). Also, there is a universal co-saving scheme for each newborn baby (named as "Child Development Account"), with an initial deposit of S$3,000 (HK$17,460) from the Government. For subsequent deposits injected from parents till the age of 12, there is co-matching from the Government subject to a ceiling that again varies positively with the number of children in the families concerned;25Legend symbol denoting The maximum co-matching from Singaporean Government is set at S$3,000 (HK$17,460) for the first child, S$6,000 (HK$34,920) for the second child, rising up to S$9,000 (HK$52,380) for the third and fourth child, and S$15,000 (HK$87,300) for the fifth child and beyond.
  (b)	Tax incentives under the Parenthood Tax Rebate ("PTR"): There are two parenting tax incentives in Singapore not seen in Hong Kong. First, on top of child allowances, Singaporean parents can deduct tax payable from the one-off PTR rebate of S$5,000 (HK$29,100) in the birth year of the first child.26Legend symbol denoting PTR is set at S$10,000 (HK$58,200) for the second child and S$20,000 (HK$116,400) for the third child and beyond. See Inland Revenue Authority of Singapore (2021a). Also, all working mothers can claim Working Mother's Child Relief ("WMCR"), exempting 15% of their earned income in calculating personal income tax for the first child;27Legend symbol denoting WMCR exempts 20% of the working mother's income for the second child and 25% for the third child and beyond. See Inland Revenue Authority of Singapore (2021b).
  (c)	Longer parenting leaves: In Singapore, working mothers have been entitled to up to 16 weeks of paid maternity leave since 2008, and two weeks of paid paternity leave for working fathers since 2017.28Legend symbol denoting Working fathers can share up to four weeks of maternity leave as shared parental leave upon consent. See Ministry of Manpower (2021b and 2021c). Besides, Singaporean parents can take up to six days of paid childcare leave annually before the child turning to seven and six days of unpaid infant care leave for children aged below two;29Legend symbol denoting Ministry of Manpower (2021a and 2021d).
  (d)	More generous subsidy for enrolment into childcare institutions: For children enrolled in licensed childcare centres, parents are eligible for basic monthly pre-school subsidy up to S$600 (HK$3,490) for younger infants aged 2-18 months, and S$300 (HK$1,750) for older children aged 18-72 months.30Legend symbol denoting For those families with monthly income below the threshold (S$12,000 or HK$69,840), they are granted additional subsidy subject to a maximum of S$710 (HK$4,130) per month. See Government of Singapore (2020b). To keep childcare affordable for parents, the Singaporean Government subsidizes over 320 private childcare centres during 2021-2025.31Legend symbol denoting These operators have to keep their monthly fees for full-day childcare and infant care services below S$760 (HK$4,420) and S$1,330 (HK$7,740) respectively. See Early Childhood Development Agency (2020). This policy aims to increase the access rate to places in such subsidized preschools from 50% in 2019 to 80% by 2025;
  (e)	Subsidy to enterprises for flexible work arrangements ("FWA"): As from 2013, Singaporean enterprises can apply for Work-Life Grant ("WLG") to cover the cost of FWA offered to their employees, such as flexi-load or flexi-time. For each employee using FWA regularly, annual subsidy of S$2,000 (HK$11,640) is given to the enterprise, subject to a biennial cap of S$70,000 (HK$407,400). More recently, the Singaporean Government stopped accepting new applications for WLG in August 2020 after an upsurge in FWA upon the outbreak of COVID-19;32Legend symbol denoting WLG coverage increased to more than 90 000 employees in some 8 000 companies after the outbreak of COVID-19 during April-August 2020. See Ministry of Manpower (2020).
  (f)	Priority housing to aspiring parents: In the purchase of subsidized sale flats under the Parenthood Priority Scheme, priority is accorded to those newly married couples expecting a baby or those already having one.33Legend symbol denoting Housing and Development Board (2021b). Likewise, those families with at least three children have priority under the Third Child Priority Scheme.34Legend symbol denoting Housing and Development Board (2021c). Besides, couples intending to get married within three months are entitled to buy a subsidized flat under the Fiancé/Fiancée Scheme;35Legend symbol denoting Housing and Development Board (2021a). and
  (g)	More ART support: The Singaporean Government seems to provide more support to those couples in need of ART. At public assisted reproduction centres, the Singaporean Government could co-fund up to 75% of the cost of the ART procedures, with a waiting time of just 2-6 weeks.36Legend symbol denoting Government of Singapore (2020a) and Ministry of Health (2020).

• For a family with two children in Singapore, overall financial incentives could amount to US$118,000 (HK$915,900) by the time when both children turned 13 according to an estimate.^{37Legend symbol denoting United Nations Population Divisions (2015).} With such generous child benefits, the annual public spending on support measures for marriage and parenthood quintupled to S$2.5 billion (HK$14.1 billion) during 2001-2017.^{38Legend symbol denoting Koh, C.Y. (2018).} The United Nations ("UN") thus applauded that the Singaporean pronatalist measures were the "most comprehensive" in Asia.
• Notwithstanding the apparently extensive policy package, the UN also notes that Singapore has "one of the lowest fertility rates in the world". In 2020, the Singaporean TFR was just 1.10, far below the average figure of 1.61 in OECD and just marginally ahead of Hong Kong (Figure 2). Interpretations are mixed on this paradoxical phenomenon. On one hand, some scholars gave credit to the pronatalist policies in Singapore and argued that TFR could have declined further by 10%-25% without the relevant measures.^{39Legend symbol denoting Jones, G.W. and Hamid, W. (2015).} On the other hand, some experts claimed that there was "no clear evidence" to substantiate the effectiveness of pronatalist measures on fertility in Singapore.^{40Legend symbol denoting Jones, G.W. and Hamid, W. (2015).} Echoing this observation, the UN also acknowledged that it would be empirically difficult to delineate and evaluate the impacts of pronatalist policies because they were embedded in a "wider institutional and cultural context".^{41Legend symbol denoting United Nations Population Fund (2019).}

Figure 2 - Total fertility rates in Singapore and selected places, 1970-2020

Concluding remarks

• In view of the sustained fertility downtrend locally, there is continued advocacy to launch more measures to encourage childbirths in Hong Kong. While the active pronatalist measures in Singapore are acclaimed as the "most comprehensive" in Asia, its fertility rate is not particularly impressive when compared to its peers in Asia. Whereas some observers found that the Singaporean measures are not effective enough to reverse the decline in childbirths, there were others who countered that the Singaporean fertility rate could have been materially lower without the bolstering effect from such measures.

Prepared by Sunny LAM
Research Office
Information Services Division
Legislative Council Secretariat
4 August 2021