Singapore tries to reverse low birth rate

January 24, 2013: The Government of Singapore plans to increase cash bonuses for parents of newborn babies and introduce paternity leave as a way to boost the population and reduce dependence on foreigners. The goal is to counter a low birth rate that could undermine the country's development. However, the government's efforts could come undone. December inflation figures indicate the highest level in the last quarter, limiting the central bank's scope to ease monetary policy to spur growth.

After 40 years of anti-family policies, the current prime minister, Lee Hsien Loong, is now on a mission to convince Singaporeans to marry young and have more babies.

His father Lee Kuan Yew, the city state's elder statesman, introduced family planning, legalised abortion and encouraged sterilisation in order to limit population growth during the baby boom of the Fifties and Sixties. Now the 89-year-old former leader has changed his mind and is behind his son's policies. "We've got to persuade people to understand that getting married is important, having children is important," he said recently.

In 2010, Singapore's birth rate stood at 1.3 per woman, evidence of the failure of the policies followed since 1987. Now the trend must be reversed. In 2010 and 2011, the rate was the lowest in 47 years, since independence. About 36,000 babies were born to residents in 2011, compared with nearly 50,000 in 1990.

Singapore is not alone in this situation. The United States, Japan and Germany are also industrialised economies with very low birth rates. In the case of Germany, the government has spent billions of Euros to encourage women to have children.

Father of four, Prime Minister Lee wants to favour families with children under 16 when it comes to applying for public housing, an important policy in a place where real estate prices hit record levels in the last quarter of 2012.

Inflation too is climbing fast, 4.3 per cent higher than a year earlier. In fact, "Domestic inflationary pressure is still exceptionally high," Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd., said. "For 2013, inflation will run sideways, hovering around the 4 percent mark throughout the year."