Rather than turn into a ghost town, one Portuguese village facing an exodus of young adults and dwindling birthrates came up with an answer: pay parents 5,000 euros for every new baby.

Sun-soaked Alcoutim, in the south-east near the border with Spain, has lost a third of its population over the past 20 years.

Its fertility rate, meanwhile, dropped to one of Portugal’s lowest, at 0.9 children each woman, in a country whose national rate, at 1.21 children each woman, is already the lowest in the European Union, and now cause for national concern.

Portugal was hard hit by the global financial crisis and, as elsewhere, unemployment took a toll among Alcoutim’s young people, forcing many to leave in search of jobs.

Sun-soaked Alcoutim, in southern Portugal. Photograph: Patricia de Melo Moreira/AFP/Getty Images

Cash-strapped couples who stayed put off plans to start a family.

To kickstart a baby boom, local officials came up with a cash-for-babies scheme, offering 5,000 euros (A$7,300) for each newborn to help couples cover the costs of parenthood.

“These things are expensive,” says Daniela Silva as she and her husband, Nuno, shopped for their six-month-old son, Santiago, in the town’s pharmacy.

With Daniela, 29, unemployed and Nuno, 37, on sick leave from his job at a retirement home, starting a family has been a struggle. Eye ointment, a musical mobile and a playpen cost 228 euros but the village allowance will cover the cost.

“We live with my in-laws, with 800 euros a month,” says Nuno. “The town’s help is very important for us.”

Alcoutim’s baby bonus is not the first of its kind in Portugal, but it is the most generous.



The scheme, which was set up in August, is modest in scale: six families are receiving payouts, which can be claimed until the child’s third birthday.

The project appears to be bearing fruit: nine births are expected this year, compared with six last year. In 1995, 23 babies were born in Alcoutim.

The mayor, Osvaldo Goncalves, says his goal is to “attract young people” to the hilly, riverside town “because without young people, there are no children”.

And young people particularly suffered in the 2011 financial crisis that forced Portugal to accept a 78bn euro international bailout.

Although its deficit is now under control and tourists are coming in record numbers, unemployment still stands at 13.7%, and among young people the rate is a third.

Antonio, 34, and his partner, Jessica, 22, were the first couple in Alcoutim to benefit from the program, which has covered most of their daily expenses for nine-month-old Martim.

Encarnação Maria, 91, in Alcoutim. Young people fled the town looking for jobs. Photograph: Patricia de Melo Moreira/AFP/Getty Images

“Formula, nappies and even the cost of daycare – I paid nearly nothing out of pocket,” says Antonio, who works at a youth hostel in town. Jessica works at the daycare centre.

But even the 5,000 euros “would not be enough for someone who really has nothing,” he says.

Vanessa Cunha, researcher at the Portuguese observatory for families, agrees: “Certain regions in the country, particularly in the central part, are not ideal for young people who want to work and start families.”



The economic crisis and austerity measures “left many couples in precarious conditions and postponing plans to start families”, she says.

Portugal’s slump in fertility rates is relatively recent, according to Eurostat, the EU’s statistics office. Ten years ago it still stood in the middle of EU states, with 1.41 births each woman.

If the decline continues, the country could lose 20% of its population by 2060, dropping from 10.5m to 8.6m, Portugal’s national institute of statistics says.

Lisbon’s centre-right government has been watching the local “baby schemes” and recently introduced several bills into parliament which are designed to help young parents nationwide: longer parental leaves, tax benefits and greater family allowances.

“The state heard the alarms set off by the smaller communities,” Goncalves says.

But Cunha says these initiatives, although helpful, are not the ultimate fix.

Birth rate incentives “won’t be effective so long as the job market remains closed and uncertain,” she says.