This Chinese Company Is Paying Employees $138 Million to Have Kids!
A Chinese company, which is one of the biggest online travel agencies in the world is offering new childcare subsidies worth one billion yuan which is around $138 million in an effort to encourage their employees to have kids. Workers who have been working with the company, Trip.com will receive an annual bonus of 10,000 yuan for each newborn child every year from the child's first birthday until they turn 5, the policy is set to take effect this coming Saturday which is July 8.
“Through the introduction of this new childcare benefit, we aim to provide financial support that will encourage our employees to start or grow their families without compromising on their professional goals and achievements,” the company's chairman James Liang said in a statement.
The company's announcement comes after many other businesses initiated similar benefits in the wake of China's declining population.
China's shrinking population
It's been a while since China took back its one-child policy and yet the decline in the country's population has been steady. In 2022, the country's population fell by a whopping 850,000 people compared to the earlier year, reports CNN World.
The last time the country's population declined was back in 1961 and there has been no drop ever since, until now. Experts had long predicted that the country's policy to curb population may negatively impact its growth, and it stands true today. China is now trying to take steps to stop the decline and tackle issues of aging workforce post-pandemic.
China's working population (ages 16 to 59 years old) accounting for 62 percent of the total population also declined in 2021 by 0.5 percent, as per China Briefing.
Why is China's population declining?
As mentioned it's mostly a result of the One-child policy that the country had applied on its citizens in an effort to curb the growing population. However, the falling birthday rate in recent years has been alarming resulting in the abandonment of the policy.
Another reason is of course the rapidly aging population which has many disadvantages for the country's economy. This trend is expected to double by 2050.
What is China doing to reverse the population decline?
Apart from the small initiatives the country is also introducing other policies like the three-child policy that encourages couples to have three kids. The country has also introduced tax reductions, great childcare services, and free education in an effort to increase the population of the country. Local authorities on the other hand are also providing subsidies to encourage childbirth.
Declining population, a threat to Chinese businesses
“In the long run, we are going to see a China the world has never seen,” said Wang Feng, a professor of sociology at the University of California to the New York Times.
China heavily relies on a labor-intensive, export-led model that really helped the country to reach great heights in a short span of time. The star ingredient in the success was their labor. With the declining population, the country's future labor force is in jeopardy. The loss of human capital can prove to be extremely expensive for the country's growth, and a declining population will make it very difficult for businesses to meet labor demands.
Will the Chinese market shrink?
Market size depends on many factors including the company's economic growth, expenditure of the consumer, the environment for businesses to boom, and more. China has also geared the economy towards a rise in GDP with the help of a dual circulation strategy. So it is safe to say that despite the challenges and threats posed by the declining population, China has still enough space for healthy economic activity that will eventually ensure the country's growth.