In order to ensure enough supply of labour in the market for the next 10 to 20 years, there are some recommendations to the Hong Kong government. They can be divided into two areas: (1) Local Side – Increase the Birth Rate and (2) Mainland Side – Importation of mothers and labour.
Area (1) : Local Side – Increase the Birth Rate
- Promotion of family value
To increase the public awareness of the Family Council in Hong Kong. The objective of Family Council is to promote family values. Through advertisement and education, the public can learn to appreciate the formation of a family and what is good about having offspring. Instead of Economic incentives, family councils can contribute to changing the public mindset.
- Compulsory Paternity Leave and extend maternity Leave
To implement the Paternity leave as a compulsory practice in every organizations in Hong Kong. Paternity Leave is the legal holiday allowed the fathers of children from work when his wife or partner is having a baby. This can help them to reduce their pressure on raising a child. Also, the maternity leave can be extended as well.
- Child Care Service for working women
To provide better child care services, such as establish more pre-school and nursery school, in order to mitigate the time cost of parents. As Hong Kong people need to work for long hours, some even work around the clock. This necessitates the government to give more support to this kind of services.
- Discounted / Subsidized tickets for family activities
To provide incentives for families to have a baby by reducing the expenditures of family activities. The benefit is provided in terms of cheaper tickets of parks, museum and cultural centers. This is considered to be more effective than just offering discount to children as it is not only benefit the children but also benefit the parents.
- Subsidies on transportation and grant & loan
To increase the student subsidies on transportation and tuition fee. Traditionally, government supported school children on transportation financially. In fact, government can increase the upper limit and the amount discounted for the concessionary tickets of public transport. Also, government can increase the amount of grant and lower the interest rate of the loan for university students.
Area (2): Mainland Side - Importation of mothers and labour.
- Import of Mainland Mothers
To allow mainland mothers to give birth to children in Hong Kong. There will be more babies and they can contribute to the society later on and in order to release the pressure of population ageing.
- Import of Mainland labour
To expand more programs to attract skilled or talented people to Hong Kong. Just like the Capital Investment Entrant Scheme (CIES), Chinese people can immigrate to Hong Kong and obtain Hong Kong Identity through this scheme. They are required to invest not less than HKD 6.5 million in selected investments for not less than seven years.
Given the low birth rate problem, the most direct and obvious result of this is population ageing. When the number of new born babies declines continuously, the number of the retired will then far outweigh the number of young working force in a few decades. A further implication of that is the increased burden on the young working force due to the ageing population would rise the saving rate, in turn cutting the consumption and so impose a contracting effect on the economic development.
Impacts of low birth rate will not be only appear a few decades later, but also appear when the rate starts to decline.
Let’s have a further explanation on the impact of the low birth rate of the economy.
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Starting from the rapid birth decline during the 1970s to 1990s, in the short run, it benefits a lot the economy. The reason is that the numbers in the work force had grown much more rapidly than the population as a whole and also there are fewer little dependents (i.e. children). It thus led to a more rapid economic growth. When there is a better life quality, the birth rate will further decline.
When time goes by, population ageing starts, the decreasing birth rate will cause the aged work force. An older work force could lead to labor shortages, and with fewer younger workers, pension system contributions may not be able to cover the rising costs for health and elderly care. The welfare burden may force governments to raise taxes and families to reduce savings, which will further pinch the economic growth.
Therefore, in the coming future, economy will continue to be hurt if birth rate still keep in a low position.
ECON Assignment – Question (2)
