Singapore uses cash and incentives to stave off population crisis

Tiny Singapore is throwing cash and incentives at its people to avert a long-term demographic crisis, but it may take years to see the level of success.

The city-state recently announced a series of new measures aimed at removing barriers to having children. This includes a pledge of more than S$60,000 ($47,100) to support every child from birth to 17, in what is seen as the biggest initiative yet to encourage citizens to have more babies.

Prime Minister Lawrence Wong said the initiative was “more than just incremental improvements and changes to individual systems. We want to make fundamental changes to the way we support families.”

One challenge for policymakers, however, is that many policy successes are not immediate.

“The iceberg is going to turn around very slowly and slowly. It’s going to take time. It’s going to take decades before we see any change,” Kalapana Vignesa, a senior fellow at the Institute for Policy Studies, told CNBC.

But she said the new measures were a “complete departure from previous measures” and that “starting to provide financial support is the easiest of many difficult things.”

Speaking at the Singapore National Day Rally a week ago (generally regarded as the most important policy speech of the year), Mr Wong explained that Singapore’s current measures focus on the birth of children, but with the new measures, the government wants to more consistently support parents in raising children.

The incentives include lower childcare fees, extended parental leave and increased chances of securing coveted social housing.

Singapore’s total fertility rate (TFR) will be 0.87 in 2025, a significant drop from 0.97 the previous year, and is now the second lowest in the world after South Korea’s 0.81. TFR 2.1 is the average number of children a woman must have in her lifetime to stabilize the population without resorting to migration.

Case studies from across Asia raise alarms about whether Singapore’s measures will be successful. Although South Korea has expanded childcare and family support, the birth rate remains at 0.8 despite two years of improvement, and Japan’s birth rate has declined for 10 consecutive years, reaching an all-time low of 1.14 in 2025.

Still, the fact that Singapore is taking these steps shows that it is at least trying to change the situation, said Chua Yeofwee, an assistant professor in the economics department at Nanyang Technological University.

“This new approach recognizes the long-standing financial and time costs of raising children,” Chua told CNBC. He added that the scheme is more promising than a one-time bonus because it ensures parents will receive support when their children grow up.

But he said the plan also has secondary effects, such as business interruptions while workers are on furlough, creating new hurdles for policymakers.

“The difficult part is operating costs,” Chua said. “If someone is unavailable, someone else has to do the work. So who pays for it?”