Vietnam’s demographic gamble demands more than cash bonuses

Hanoi is drafting a resolution setting cash bonuses for women to encourage childbirth as a pro-child policy. The draft proposes providing four million VND in financial support per birth to women who give birth to two children before age 35. It also proposes a one million VND payment to couples who undergo premarital health counseling and health check-ups in accordance with Ministry of Health guidelines, provided they marry at the age prescribed by law. This is part of efforts to restore the replacement fertility rate in the capital.

Vietnam enters the final phase of enjoying the demographic dividend from its golden-age structure. According to Vietnam’s General Statistics Office and the Ministry of Health, the national total fertility rate (TFR) fell from 2.11 children per woman in 2021 to a record low of 1.91 in 2024, the third consecutive year below the replacement level of 2.1. A slight increase to 1.93 in 2025 offered little comfort.

Births are falling unevenly across regions, with the alarming declines concentrated in urban centers. In Ho Chi Minh City, Vietnam’s main economic engine, the TFR collapsed to 1.32 in 2023, before increasing to 1.51 in 2025. Fertility in some economically vital areas, such as the Southeast and Mekong Delta, has dropped to 1.48–1.62 children per woman, while other areas like the Northern Midlands and the Red River Delta record above-replacement rates. Only 17 percent of the country’s provinces and cities still maintain replacement-level fertility.

The fertility rate is projected to remain below replacement level through 2030 in two of the three primary modeled scenarios. Authorities warned that structural drivers – delayed marriage, housing pressures, employment difficulties, and soaring living costs – show no signs of abating.

The recently amended Population Law, which took effect on July 1, 2026, is symbolically significant. It abolishes the long-standing two-child limit that has been in place since 1988 and shifts official language from “family planning” to “comprehensive population and development policy.” The law provides one-time cash payments of at least two million VND per birth. However, this is less than half the regional monthly minimum wage in economically advanced centers, such as Hanoi and Ho Chi Minh City. The monthly cost of raising a child in big cities hover around 15 million VND – more than three times the maximum value of the one-time birth bonus. Under such financial pressure, having a child can feel like a high-risk decision.

Why cash bonuses fall short

Policies focused only on one-time incentives are structurally insufficient. Experts suggest that such measures have small or temporary effects on fertility rates. Pham Thi Lan, Head of Population and Development at UNFPA Vietnam, noted that sustained child-rearing support is more likely to shift parental behavior than birth payments alone.

More importantly, it clouds the theoretical assumptions underlying conventional pronatalist interventions and the structural barriers preventing fertility recovery. Singapore has launched programs encouraging parents to have three or more children to tackle its extremely low fertility rate since 1987. Similarly, South Korea has deployed consecutive Basic Plans for Addressing Low Fertility and Aging Society since 2006 – all offering generous cash benefits, extended parental leave, and housing priority for first-time families. However, the results are modest. Singapore’s 2023 Baby Bonus enhancements, offering $11,000 for the first and second child, and $13,000 for the third and subsequent child, could not stop its TFR from declining to 0.97 in 2024 and 0.87 in 2025. South Korea, despite attractive packages including 52 weeks of paid parental leave, saw its TFR drop from 0.92 in 2019 to a historic low of 0.72 in 2023. Even extensive approaches in Nordic countries such as Sweden, backed by a strong social welfare system, raised fertility rates only for a limited period.

Gender norms and labor systems exacerbate the situation. In Vietnam, the clash between legacy Confucian values favoring male-dominated family systems and the rapid expansion of employment opportunities for women has made marriage postponement and non-marriage more common. Better-educated women tend to enter the workforce after completing their education, leading them to delay marriage and postpone childbearing while having greater access to modern contraceptive methods.

The structural demands of the labor market - long working hours, limited workplace flexibility, poor work-life balance, and inadequate childcare support – disproportionately burden women with childcare responsibilities, while men are usually exempt from domestic work. Women, particularly in executive and managerial positions, also face higher career risks of employment disruption and penalties. When work and family institutions fail to adapt to women’s dual roles, fertility declines as women prefer career demands over maternal investment.

Peter McDonald’s Gender Equity Theory of Fertility explains this phenomenon: in East Asian contexts, “ultra-low fertility” is the inevitable outcome when women enjoy substantial freedom within individual-oriented institutions – those that serve individuals regardless of their family status, such as education systems and labor markets, yet face heavy constraints within family-oriented ones – those designed to support family formation and childrearing, including parental norms and workplace flexibility arrangements. McDonald contends that the disjuncture between high gender equity in individual-oriented institutions and persistently low gender equity within the family sphere – a configuration emblematic of East Asian societies – is a key driver of ultra-low fertility. The situation reflects entrenched cultural expectations and institutional structures that have not kept pace with women’s changing economic roles. Until this fundamental conflict is resolved, mere financial incentives will fail to reverse the trend.

Furthermore, the pressure for academic success often drives parents into an educational arms race involving private tutoring, language classes, and extracurriculars. As the cost of raising a child escalates, stopping at one or two children is less of a choice and more of a financial necessity.

Housing makes the calculation harder. A 2026 World Bank report places the housing price-to-income ratio in some urban areas at around 30 times average annual household income – well above the international affordability benchmark of three to eight times. Residential prices rose nearly 12 percent annually, far outpacing income growth of 6.4 percent. In the second quarter of 2026, primary market prices averaged around $3,900 per square meter in Ho Chi Minh City and $3,950 per square meter in Hanoi. The country’s aggressive infrastructure push is worsening housing affordability for buyers under 35, with introductory mortgage rates doubling this year.

Young people are postponing marriage for financial reasons, citing housing as their biggest concern. While priority access to social housing for parents of two or more biological children is promising in principle, it remains difficult for first-time buyers to secure. Many meet the income eligibility criteria yet lack the savings required for a down payment or the capacity to service a long-term loan.

What makes Vietnam’s situation distinct is not merely the severity of the decline, but the stage at which it is occurring. Scholars worry that this shift is happening at an earlier stage of development than in other rapidly aging countries. Japan’s GNI per capita was already US$35,000 when its TFR first fell below 1.5 in 1993. South Korea’s GNI per capita was US$19,000 when it launched its first serious pro-natalist program in 2006. In contrast, Vietnam’s GNI per capita reached just US$4,970 in 2025, barely crossing the World Bank’s threshold for upper-middle-income status. In other words, Vietnam is attempting demographic interventions at a stage of development when its potential tax base and the fiscal instruments are just a fraction of what those countries commanded.

In 2021, the World Bank warned that Vietnam will have less time to adapt to an aged society than many advanced economies had. The golden demographic window is projected to close by 2036 – nine years earlier than the government’s stated target of 2045 for a high-income, developed nation. On current trajectories, the country will become an aged society before accumulating the necessary resources to manage one.

Making parenthood genuinely feasible

Demographic trends cannot be reversed by slogans or isolated benefits. One-off bonuses will only be effective if implemented within conditions where having and raising children is practically feasible. Sustainable solutions, such as introducing long-term child-rearing incentives, developing a family- and child-friendly environment, changing couples’ perceptions of early childbirth, supporting work-life reconciliation, and investing in high-quality childcare and education, are crucial to boosting the fertility rate. The uniform national target of achieving a replacement-level fertility rate may need to shift toward decentralized, customized scenarios tailored to specific regions. Low-fertility cities such as Ho Chi Minh City warrant pronatalist incentives, while higher-fertility regions such as the Northern Midlands and Central Highlands call for population stabilization rather than explicit fertility promotion. Furthermore, in these less economically developed regions, pronatalist policy should be integrated into broader development imperatives, such as raising living standards and expanding access to education and work opportunities.

Similarly, policies should be calibrated to the specific barriers facing different groups. Low-income and non-standard-employed parents need broad leave and cash eligibility; highly educated women require parental leave benefits and quality childcare support; young adults need employment security and accessible housing before financial incentives; and older first-time parents need both fertility treatment and a labor market that does not penalize career breaks. For Vietnam, a practical first step is closing the 12-month gap between the end of maternity leave – when a child is typically six months old – and the minimum age for daycare admission at 18 months, a gap that falls hardest on mothers without extended family support.

Additionally, policymakers should adopt the underlying design: sustained cash benefits broad enough to reach all families regardless of employment status or income, and state-supported universal childcare that reduces the initial cost of combining work and motherhood. Financing such measures would require a significant expansion of the state budget allocated to population and development objectives – which currently account for a modest 15.5% share. In the near term, a more realistic approach may involve means-tested rather than universal provision, prioritizing free childcare and enhanced bonuses for low-income households before scaling toward universality as fiscal space expands.

In the long run, however, policies should not treat low fertility primarily as a resource-shortage problem that can be addressed with financial tools (more cash benefits) or simple demographic solutions (more babies). Vietnam should address the sociocultural, structural and institutional barriers that are hostile to fertility, including gender inequality, economic precarity, labor market rigidity, and work-life conflict. The apparent trade-off between women’s careers and family formation is not inevitable; it stems from institutional mismatch. Where institutions adapt through employment security, flexible working arrangements, and gender equality in domestic labor, women can combine careers and motherhood. As a starting point, incentivizing fathers to take parental leave while receiving full pay for a limited period would redistribute caregiving responsibilities and reduce the professional cost that falls entirely on mothers. This will require sustained public expenditure and a robust supervisory mechanism to ensure the policy is neither underfunded nor inequitably distributed, extending meaningful coverage beyond formal-sector workers to reach the large informal workforce.

Public and workplace-targeted campaigns that challenge mother-only childcare norms, reduce social stigma, and promote shared parental responsibility should be considered long-term solutions to broader shifts in gender expectations. To maximize effectiveness, however, such campaigns must be attentive to the financial, institutional, and structural barriers that vary across demographic groups. They should be tailored to the lived realities of women in different social and economic contexts, while simultaneously addressing the increasingly child-avoidant tendencies prevalent among younger Vietnamese generations. The latter may prove decisive, particularly in urban areas, where these attitudes are most entrenched.

Now that Vietnam’s demographic clock is ticking, and the policy response must match both its urgency and its complexity.

Vu Luu is a development researcher in political economy, comparative social policy and demographic governance based in Europe. He studied international affairs at the Brussels School of Governance and media and communication studies at Fontys University.