Singapore is overhauling its landmark baby bonus scheme, first introduced in 2001, as the city’s fertility rate and number of births fall to record lows.
In 2025, births in the Southeast Asian country fell below 30,000 for the first time in its post-independence history, while the fertility rate dropped to just 0.87 per woman, a record low. That’s a dangerous prospect for any country, but especially for Singapore, crammed into a space smaller than New York City.
“The country does not have the natural resources to finance the costs of supporting an aged society, including both care and medical expenditures,” Tan Poh Lin, a senior research fellow at the National University of Singapore (NUS)’s Institute for Policy Studies explains. Immigration, in his view, won’t be enough to solve the problem: “Boosting the fertility rate is crucial to slow down the rate of change and allow society to adjust economically as well as institutionally.”
At the country’s National Day Rally on Aug. 23, Prime Minister Lawrence Wong unveiled the “SG Child Support Package,” boasting measures like expanded childcare leave, strong financial support for parents, more affordable caregiving options, and extra chances to get subsidized housing. In total, the support is equal to almost 70,000 Singapore dollars ($55,000) by the time a child is 17.
Demographic experts are cautiously optimistic about the new scheme, which appears to offer more sustained and holistic support for families.
“Singapore’s family policies had become increasingly complicated, with benefits varying by birth order and across different schemes,” says Bussarawan Teerawichitchainan, a social demographer and sociologist from NUS. With the new package, “support is attached more clearly to each child and is provided over a longer period of childhood rather than being concentrated primarily around birth.”
But previous policies to give parents more money, both in Singapore and elsewhere in Asia, haven’t been able to reverse falling birth rates.
“Singapore has progressively expanded financial support for marriage and parenthood over many years, yet fertility has continued to decline,” Teerawichitchainan admits. “Concerns voiced by parents increasingly involve not just money but time, work-family pressures, childcare, housing and other demands associated with raising children.”
Economic impact of low birth rates
Persistently low birth rates could threaten a country’s ability to sustain its economy. “Smaller younger cohorts enter the workforce while the older population continues to grow…over time, that places greater pressure on labor supply and the tax base,” says Chua Yeow Hwee, an economist at Singapore’s Nanyang Technological University (NTU). “For businesses, an aging and shrinking workforce also makes labor constraints more acute.”
Singapore has long turned to foreign workers to make up for a dwindling domestic workforce. As of 2025, Singapore is home to nearly 1.6 million foreign workers, making up 40% of the country’s total labor force, the highest in Asia outside of countries in the Middle East, according to the Migration Policy Institute, a U.S. think tank.
The country is also placing its hopes on automation, with the government committing 1 billion Singapore dollars ($787 million) to public AI research from 2026 to 2030.
“The relationship between demography and economic growth is complicated,” Teerawichitchainan explains. “Economies can adapt through productivity growth, technology, longer and healthier working lives, higher labor force participation and immigration.”
The role of companies
Singapore’s new scheme shifts from merely encouraging births to focus on family well-being over the long term, which might help change how potential parents think about children.
“Cash gifts have a positive impact on births, but the effect tends to be short-lived as many beneficiaries do not increase their final family size,” Tan of NUS explains. “Tangible change can only be achieved by adjusting parenting expectations, including the notion that parenthood involves sacrificing personal wellbeing.”
Some of the responsibility for changing these expectations lies with companies. “There is a limit to what government policy can do directly, and employers have an important role,” Chua says. “A generous leave entitlement has less value if employees believe that using it will make them appear less committed or affect their advancement.” (Singaporeans get 16 weeks of paid maternity leave and four weeks of paternity leave, as well as 10 weeks of parental leave, shared between both parents, that must be used within a year of birth).
But there may be little anyone–government or corporate–can do to persuade people to have children amid greater economic uncertainty.
“These days, folks will have children only if they are confident that they could ease their children’s journey ahead and help them access a good life in the future,” says Tan Ern Ser, an adjunct principal research fellow at Singapore’s Lee Kuan Yew School of Public Policy. “Unfortunately, the world we live in today does not leave much room for optimism, notwithstanding the government’s relentless efforts.”
Singapore’s government, too, acknowledges that there are limits to its ability to influence its populace to have kids. “The decision to have children is a deeply personal one. Policies alone cannot make this happen,” Wong, Singapore’s Prime Minister, said during his speech. “But what we can do is make it easier for Singaporeans who want children to start and raise a family.”
Ultimately, Singapore may just need to accept that it’ll have to live with fewer people.
“The economic challenge is not simply to restore some particular fertility level,” Teerawichitchainan concludes. “It is also to build institutions, labor markets, and technologies that allow Singapore to prosper under a demographic reality that may remain one of low fertility and population aging.”
Singapore is undertaking a significant overhaul of its baby bonus scheme, originally launched in 2001, in response to alarming declines in its fertility rate and birth numbers. In 2025, the nation’s births dipped below 30,000 for the first time since gaining independence, with a fertility rate plummeting to a historic low of 0.87 children per woman. This demographic trend poses serious challenges for Singapore, a densely populated city-state lacking natural resources to support an aging population.
Experts highlight that boosting the fertility rate is crucial for mitigating the economic and societal impacts of an aging demographic. Tan Poh Lin, a senior research fellow at the National University of Singapore, emphasizes that immigration alone will not suffice to address these challenges. The government’s new initiative, the “SG Child Support Package,” was introduced by Prime Minister Lawrence Wong during the National Day Rally on August 23. This package features expanded childcare leave, financial support for parents, affordable caregiving options, and increased opportunities for subsidized housing, amounting to approximately 70,000 Singapore dollars (around $55,000) per child by age 17.
Demographic experts have expressed cautious optimism regarding the new scheme, which aims to provide more consistent and comprehensive support for families. Bussarawan Teerawichitchainan, a social demographer from NUS, notes that previous policies had led to a complicated system with varying benefits based on birth order and different schemes. The new package intends to offer clearer and longer-term support attached to each child, moving away from a focus primarily on the time of birth.
Despite these efforts, there is skepticism surrounding the effectiveness of financial incentives in reversing declining birth rates, as previous attempts in Singapore and other Asian countries have not yielded significant results. Teerawichitchainan points out that parents’ concerns extend beyond financial issues to include work-life balance, childcare availability, housing, and other challenges associated with raising children.
The economic implications of sustained low birth rates are concerning. Chua Yeow Hwee, an economist at Nanyang Technological University, warns that a declining younger workforce alongside a growing older population could strain labor supply and tax revenues. To address this, Singapore has heavily relied on foreign labor, with nearly 1.6 million foreign workers constituting 40% of the workforce as of 2025. Additionally, the government is investing in automation and AI research, committing 1 billion Singapore dollars ($787 million) for public AI advancements from 2026 to 2030.
The new child support scheme marks a shift from simply incentivizing births to fostering family well-being, which might influence how potential parents view child-rearing. Tan highlights that while cash incentives can temporarily encourage births, they do not necessarily lead to families choosing to have more children. A more profound change is needed in societal expectations around parenting, where personal well-being is often sacrificed.
Significantly, the responsibility to change perceptions of parenthood also lies with employers. Chua points out that generous parental leave policies may be underutilized if employees fear that taking time off could hinder their career progression. Currently, Singaporean policy provides 16 weeks of paid maternity leave, four weeks of paternity leave, and 10 weeks of shared parental leave, all of which must be taken within a year of birth.
However, the prevailing economic uncertainty complicates the decision for many to have children. Tan Ern Ser, an adjunct principal research fellow at the Lee Kuan Yew School of Public Policy, notes that potential parents are more likely to have children if they feel confident about providing a good future for them. Unfortunately, current global conditions often lead to pessimism regarding economic prospects, overshadowing government initiatives aimed at encouraging family growth.
Singapore’s government acknowledges the limitations of policy in influencing personal decisions about childbearing. Prime Minister Wong remarked that while policies alone cannot compel individuals to have children, the government can facilitate an environment that supports those who wish to start families.
Ultimately, Singapore may need to adapt to a reality of lower population levels. Teerawichitchainan concludes that the challenge lies not only in raising the fertility rate but also in developing institutions, labor markets, and technologies that enable the country to thrive despite demographic shifts toward lower fertility and an aging population. The government’s focus on creating a supportive environment for families reflects an understanding of the complex interplay of economic, social, and personal factors that influence family planning decisions in contemporary society.
