Barcelona Field Studies Centre

Spain adopts baby bonus scheme

July 5th, 2007

Spain has launched a financial incentive scheme to encourage families to have more children, becoming the latest in a list of countries employing such a tactic to boost population numbers.

The family of every child born in Spain will get 2,500 euros to help raise the country's low birth rate and support the fast-growing economy, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

The baby bonus follows similar moves in Australia, France, Singapore and Scandinavia to encourage larger families and counteract a trend towards ageing populations that places a burden on pension and social security systems.

'To keep progressing, Spain needs more families with more children and families need more support to have these children,' Mr Zapatero told Spain's Congress in his state of the nation address.

Spain's birth rate rose to 1.37 per woman of child-bearing age last year, its highest rate since 1991, but still among the lowest in Europe. The rate would be far lower if it were not for the arrival of nearly 4 million immigrants since 2000. These immigrants, mainly from Latin America and North Africa, tend to have larger families.

Other countries are also paying parents a baby bonus, with some claiming to see positive results.

Australian Treasurer Peter Costello announced last week that the country's baby bonus scheme had led to the highest number of births since 1971 and the second-highest since 1911. The country has been experiencing a baby boom of late, with fertility rates rising to 1.83 children per woman last year, against 1.7 children from 2002 to 2003, said a report in Australia's Herald Sun newspaper last Thursday. Mr Costello, who hailed Australia's population milestone of 21 million last week, linked the rise in fertility rates to the introduction of a baby bonus in 2004, according to the Sydney Morning Herald last Wednesday.

In France, baby-related schemes offer paid maternity leave for six weeks before and 10 weeks after childbirth, at a maximum of 80 per cent of earnings, for the first and second child. For a third child, it is eight weeks before and 18 weeks after childbirth. French fathers also get time off. Paternity leave extends to 14 days of paid leave and to 21 days in the case of multiple births.

Singapore's baby bonus scheme, which was launched in 2001, currently pays out €1,500 to parents for the first and second child, and €3,000 for the third and fourth child. In addition, a Children Development Account, set up for the second to fourth child, allows the Government to match dollar-for-dollar what parents save there in the first six years of their child's life. The Government has capped this amount to €3,000 for the second child, and €6,000 for the third and fourth child.

In Germany, the 'Elterngeld' or 'parent money' programme allows an adult who stops work after a child is born to continue to claim two-thirds of their net wage, up to a maximum €2,000 per month. Low earners can claim 100 percent compensation for lost wages. One parent can claim for up to 12 months; if both parents take a turn, they can claim the benefit for a total of 14 months - a tweak designed to encourage more fathers to help. Germany previously paid a flat €350 a month in benefits to needy parents for up to two years. The change is expected to raise the annual outlay in direct payments for parents with infants by about €1 billion per year to €4 billion.

Britain introduced a so-called 'baby bonds' scheme in 2004, giving a €500 voucher to every newborn to start a trust fund, while a new Russian law entitles families to a bonus of €11,000 following the birth of a second child and any subsequent children.