Govt must do more to encourage people to have kids
In residential compounds of Hong Kong, it is not difficult to see parents walking together with their children — sometimes many kids. You may thus think the city is not short of babies. But don’t let this fool you — Hong Kong actually has one of the lowest fertility rates in the world. According to statistics from 2014, a Hong Kong woman on average gives birth to 1.23 children, which is not only lower than in the United States (1.86) and Britain (1.81) but even lower than Japan’s 1.42, a country well-known for its low birth rate. Considering a fertility rate of replacement level is 2.1, Hong Kong’s birth rate of 1.23 is alarmingly low, indicating the city will have fewer and fewer young people.
Young people are the source of the future labor force. With such a low birth rate, it’s only natural that Hong Kong will face a labor shortage in the coming years. According to the estimates made by the Census and Statistics Department, the city’s labor force will peak at 3.65 million in 2018 and then begin to shrink. Young people are also those who innovate and start up new enterprises. A rapidly aging society is likely to lose its creativity and hence its competitiveness.
The SAR government has undertaken a slew of measures to attract talents from both the mainland and foreign countries to replenish Hong Kong’s labor force. The latest policy was introduced in 2015 to attract the offsprings of Chinese Hong Kong permanent residents who reside overseas to the city. Though these policies are all important to prevent the city’s labor and talent pool from shrinking, a more direct way to alleviate the negative impact of aging is to encourage couples in the city to give birth to more children through better social benefits offered to parents.
Currently the benefits for Hong Kong’s parents are not favorable compared with many other places. For instance, the statutory maternity leave in the city is only 10 weeks, a rather meager period that is even shorter than the minimum 98-day maternity leave on the mainland. In other developed economies, mothers in Germany and Japan have maternity leaves of 14 weeks, and their counterparts in Britain can enjoy a maximum of 52 weeks of maternity leave! The paternity leave for new fathers, which was only introduced in Hong Kong last year, is an outrageously low three days, while in Germany new fathers can enjoy paternity leave as long as that of the mothers.
Low maternity and paternity leaves are no doubt a deterrent for the city’s couples to have more children. Considering the huge pressure from doing their jobs and baby-nursing at the same time, many potential moms have to postpone the date of bearing a child or even choose not to have babies at all. The SAR government should consider lengthening the minimum maternity leave to at least 14 weeks and offer new mothers the right to further extend the leave with partial pay.
High living costs are another factor negatively affecting Hong Kong’s fertility rate. Now the SAR has provided some benefits to parents to alleviate their financial burdens, but these are far from generous. Tax-paying families may enjoy child allowance for HK$100,000 taxable income for each child — meaning maximum HK$17,000 tax rebate a year for each child. The allowance is not totally adequate because richer families get more tax rebate while poorer families, who pay lower tax rates but need more financial help in raising children, get less. It also means families that have incomes lower than the taxable threshold cannot enjoy the allowance at all! In comparison, a German family may receive 190 to 221 euro ($215$250) a month for each child they have, equaling HK$20,000 to HK$23,300 a year, regardless of whether they pay income tax or not.
The Hong Kong government should learn from Germany and set an across-the-board child allowance, which may stand at HK$20,000 a year for each child, for all families in the city. Only with vigorous financial and policy support from the government, will potential mothers and fathers in the city be more inclined to give birth to more babies.