Vietnam bets on baby bonuses to get rich before it grows old

Vietnam has introduced a raft of incentives to encourage couples to have more children as the Southeast Asian nation seeks to reverse a fast-declining fertility rate. Gone is the country’s long-standing two-child policy, scrapped last year. In its place is a new population law, which took effect on July 1, offering a suite of sweeteners designed to nudge Vietnamese couples towards larger families. These include seven months of maternity leave for second children, subsidised prenatal and newborn screenings, cash bonuses of up to 6 million dong (US$228) and priority housing for young parents who have two children before the age of 35. Vietnam’s fertility rate sank to a record low of 1.91 births per woman in 2024, ticking up only marginally to 1.93 the following year and still well short of the so-called replacement rate of 2.1 needed to sustain a population. The Health Ministry has set a target of raising the fertility rate to replacement level by 2030, but achieving that will be a challenge. Already, nearly one in seven Vietnamese is older than 60; by mid-century, government projections suggest that figure could hit one in four. Recently classified by the World Bank as an upper-middle-income country, Vietnam has enjoyed an export-led boom in recent years. It recorded economic growth of 7 and 8 per cent in 2024 and 2025, respectively, on the back of shipments that increased by more than 15 per cent in both years. But the social infrastructure needed to sustain an ageing population has lagged behind. “Vietnam is ageing at an earlier stage of development than today’s advanced Asian economies,” Albert Park, chief economist at the Asian Development Bank, told This Week in Asia. “This creates additional challenges because pension and care systems are less mature and the country has fewer resources because they are less developed.” The country’s apparent fate stands in stark contrast to that of some of its wealthier neighbours. Japan, South Korea and Singapore all became prosperous before their population aged, giving them decades to build robust pension and healthcare systems. Vietnam has no such luxury. “This is often described as the risk of ‘getting old before getting rich’,” said Giang Thanh Long, a professor at the National Economics University in Hanoi. A per capita income below that of some of its wealthier regional peers left Vietnam with “fewer resources to finance pensions, healthcare and long-term care while maintaining investments in education, healthcare, infrastructure and economic development”, he said. Meanwhile, an outsize informal labour market whose workers largely fall outside the social insurance net only exacerbates the issue. Many elderly Vietnamese still depend on their children for support, but Long warned that this safety net was starting to fail as fertility fell, families shrank and migration pulled young people away from ageing parents. That dislocation is most visible in the countryside. While urban fertility has dropped amid rising living costs, greater female workforce participation and shifting family preferences, rural Vietnam faces a different crisis: the mass departure of young people. “Large numbers of working-age adults move to cities or industrial zones for employment, leaving behind communities with a disproportionately older population,” Long said. Beyond baby bonuses Hanoi’s plan to offer cash incentives to prospective parents may not deliver the results it is hoping for, according to analysts. “Direct cash incentives for having additional children generally have not been effective in raising fertility if one looks at the evidence from other countries,” said Park, the economist. Strengthening social protections such as health, pension and care programmes would be more helpful, he argued – especially for domestic workers and informal labourers who were “particularly vulnerable”. Long agreed, pointing to a pattern in other countries grappling with similar fertility headaches. “Experiences from Japan, South Korea, Singapore and several European countries show that one-off cash incentives or birth bonuses generally have only modest and temporary effects,” he said. Vietnam has already begun layering in longer-term support, from expanded childcare to parental leave and affordable housing for young families, but their impact will take years to materialise. Long warned that generous maternity provisions could also backfire if they were to fuel discrimination against women of childbearing age in labour-intensive industries such as garments and textiles. “If employers believe that women of childbearing age are more likely to take maternity leave or require flexible working arrangements, some may become more reluctant to hire, promote or invest in female employees,” he said. “It is a quiet discrimination that is difficult to detect and can undermine women’s career opportunities and widen gender inequalities.” Extending parental leave to fathers could help counter the assumption that child rearing was women’s work alone, he suggested. Ultimately, baby bonuses may prove to be a costly bet with a limited pay-off. If birth rates fail to rise significantly, Vietnam could find itself pouring scarce public funds into incentives without the next generation of taxpayers to justify the cost. Long’s prescription is a pivot in strategy, from trying to reverse the demographic slide to adapting to it. That would mean raising productivity through technology, drawing more women and older adults into the workforce, investing in reskilling and developing a “silver economy” geared towards an ageing population. Park was similarly pragmatic. While he said population ageing would inevitably weigh on growth as the labour force shrank, he suggested that the effects of demographic drag could be offset. “They can be mitigated if healthy ageing enables older persons to continue to work even as they age and if investments in health, education and even technology raise the productivity of workers,” he said.

Vietnam bets on baby bonuses to get rich before it grows old

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Hanoi is throwing cash and housing at its low birth rate, scrambling to protect an export boom that is fast running out of young workers

Hanoi is throwing cash and housing at its low birth rate, scrambling to protect an export boom that is fast running out of young workers