S$70,000 is a big number for the NDR baby package. It might not be enough to boost fertility rate

AT THE National Day Rally on Aug 23, Prime Minister Lawrence Wong announced a major reset of Singapore’s support for families. 

The headline was the money: Under the new SG Child Support Package, every eligible Singapore citizen child will receive up to S$62,000 from birth to age 17 – almost S$70,000 including existing MediSave and Edusave grants, said the Prime Minister’s Office.

But the most consequential changes are structural, and they are easy to miss.

The government will now bear the full cost of childcare leave, rather than splitting it with employers. Support is flat for every child, replacing schemes that tiered payments by birth order. 

The largest block of money arrives not at birth but as an annual payout of S$2,000 until age 16.

Full-day childcare fees at government-supported centres will fall to S$150 a month by 2030, and families with children get more housing support, including extra ballot chances.

Each of these support measures reflects a view about why birth rates fall – and about what policy can and cannot do. These views deserve examination, because Singapore has been here before. 

The Baby Bonus was introduced in 2001, when the total fertility rate was about 1.4. After a quarter-century of steadily enhanced incentives, the rate stands at 0.87 in 2025, a record low, said the Singapore Department of Statistics.

An obvious question hangs over the new package: What would make this time different?

The gap between want and ability

Start with why public money belongs here at all.

For a couple in their late 20s or early 30s, a child means a large financial commitment over many years, heavy demands on time when careers are most demanding, a career cost that still falls more heavily on women, and growing uncertainty about the world the child will enter.

For an individual household, having fewer children, or none at all, can be entirely reasonable.

But when many households choose alike, everyone bears the consequences: fewer workers in an ageing society, weaker demand and fewer of the interactions through which people exchange ideas, match to jobs and start businesses.

Parents bear most of the private cost of raising a child; society shares much of the eventual benefit.

That gap is the economic case for public support. It also defines the goal. Policy cannot – and should not – tell people how many children to have.

What it can do is narrow the distance between how many children people want and how many they feel able to have.

That is the test the package should be judged by, and it explains why design matters more than the headline sum.

Cash alone has a mixed record. South Korea has spent more than 360 trillion won (US$268 billion) on pro-natal policies since 2006, by Reuters’ tally of government budgets, yet its fertility rate fell to 0.72 in 2023 before recovering to 0.80 in 2025, data from Statistics Korea showed.

That is an encouraging trend, but it is too early to credit any single policy.

The research points in a fairly consistent direction: In rich countries, the fertility rate is higher where having children is more compatible with having a career, as economists Matthias Doepke, Anne Hannusch, Fabian Kindermann and Michele Tertilt concluded in their 2023 survey of the field.

The binding constraints are usually time, careers and care – not just cash.

Score the new measures against that test, and the quiet ones do well.

Having the government bear the full cost of childcare leave removes one reason companies might quietly regard parents – especially mothers – as more expensive to employ. It attacks the career penalty at its source, which is the constraint the evidence says matters most.

In contrast to the older Baby Bonus scheme, which disbursed higher cash amounts for each child after the second, the new Child Support Package provides a single core amount for every child. That translates to a particularly large increase in support for the first child. 

That is where the threshold lies: becoming a parent at all is a different decision from having another child, and it is the one Singaporeans are increasingly declining.

Credits of S$2,000 a year to age 16 match how the costs of raising a child actually arrive – not as a lump sum at birth, but over their formative years.

And cheaper childcare and housing support address the practical constraints couples cite: money, time and space.

None of this makes raising a child easy, but it shifts more of the cost from parents to society. Economically, that is the point.

Going beyond the package

What, then, is still missing? Three things.

First, the workplace. The government can fund childcare leave, but only employers and unions can make taking it – especially by fathers – normal in practice.

An entitlement that employees hesitate to use does not relax any constraint. The tripartite institutions that manage so much else in Singapore’s labour market should treat this as part of their remit.

Second, quality in the early years. As fees fall, demand will rise, and the binding constraint will shift from what parents can afford to the number and quality of educators.

The S$150 fee will disappoint if it buys a place in an overstretched classroom. Investment in the people who work with young children has to keep pace with the subsidy.

Third, confidence in the future. A decision to have a child looks 20 to 30 years ahead, and prospective parents today wonder what kind of working world their children will enter as technology advances. 

This is where family policy meets labour-market policy: The government’s 2026 May Day promise – “We may not be able to protect every job. But we will protect every worker” – is, in this sense, also fertility rate policy.

A credible commitment to carry people through economic change makes the longest-term commitment of all easier to make.

The new package is unlikely, by itself, to restore the fertility rate to replacement level, and should not be judged by whether births jump next year.

The right test is quieter: Over the coming decade, does the gap narrow between the families Singaporeans want and the families they have?

Raising the next generation benefits all of society, while parents carry most of the cost. Sharing more of that cost is not just family policy; it is economic policy.

Some national investments pay back in quarters; this one takes a generation. It is also the one that cannot be skipped.

The writer is dean and Lee Kong Chian Professor of Economics at Singapore Management University, and a pillar lead at the Resilient Workforces Institute