Vietnam rolls out baby incentives after ending two-child policy

Vietnam has introduced a package of incentives aimed at encouraging families to have more children, just a year after scrapping its decades-old two-child policy, as the country seeks to tackle falling birth rates and a rapidly ageing population.

A new population law and accompanying regulations came into effect on Wednesday, marking a significant change in Vietnam's demographic strategy. The measures include longer maternity leave for mothers having a second child, subsidised prenatal and newborn health screenings, and one-off cash bonuses for eligible families.

The reforms reflect the government's growing concern that Vietnam could grow old before becoming a high-income economy, with demographic trends threatening future economic growth and labour supply.

New incentives

Under the new rules, mothers giving birth to a second child will receive an additional month of paid maternity leave, extending the benefit from six to seven months.

The government will also subsidise prenatal and newborn health screenings and provide one-off cash payments of up to US$228, equivalent to around two-thirds of Vietnam's average monthly salary, for mothers who meet specific eligibility criteria.

The incentives come after Vietnam officially ended restrictions that had discouraged families, including Communist Party members, from having more than two children.

Changing priorities

Pham Thi Lan, head of population and development at the UN Population Fund (UNFPA) in Vietnam, described the reforms as a major policy shift.

"This is a significant shift in approach.We are moving from controlling family planning to focusing on population development,” she said.

Lan said the legislation responds to Vietnam's changing demographic landscape by giving couples greater freedom over reproductive decisions.

However, she cautioned that one-off financial incentives alone may not be enough to encourage larger families.

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

Economic concerns

Vietnam's birth rate has fallen below the replacement level of 2.1 children per woman and currently stands at 1.93, while life expectancy has climbed to nearly 75 years.

People aged over 60 now account for more than 10% of the population, with government projections indicating that the figure will rise to 25% by the middle of the century, when the country's population is expected to begin shrinking.

Economists warn that Vietnam's ageing population is emerging before the country has reached the income levels achieved by other ageing economies such as Japan, raising concerns about future labour shortages and increased pressure on public welfare systems.

The World Bank has previously warned that Vietnam has only a "narrow window" to implement reforms before facing "major slowdowns in growth".

Families unconvinced

Despite the government's incentives, many families remain reluctant to have more children because of the rising cost of living.

Nguyen Kim Bich, a 32-year-old mother in Hanoi, said the additional maternity leave and financial support were welcome but insufficient.

"I could stay at home one more month with the baby, and my husband could stay home some more days."

However, she said the incentives would not change her family's plans.

"The benefits are nice but not enough. One more month of leave and $75 can never attract us to have a second kid."

Nearly half of her family's combined monthly income of around US$1,000 already goes towards raising their first child, while they also share a home with her husband's parents.

Similar concerns were echoed by Tran Minh Anh, a 24-year-old cashier in Hanoi.

"I will not have any kids at all. How can I take care of one more person? No way!"

A recent government survey found that 73% of married respondents said their income played a key role in deciding whether to have children, suggesting that broader financial support may be needed if Vietnam hopes to reverse its declining birth rate.