As Unemployment Rates Surge Concerns Rise Over Bhutan’s Labor Market Challenges



The COVID-19 pandemic has had a lasting impact on the labor market, and its effects are still being felt.

According to the annual report of 2023 from the Royal Monetary Authority (RMA), in 2022, the labor market experienced a significant decline, with the unemployment rate reaching 5.9 percent, compared to 4.8 percent the previous year. Although the agriculture sector employs a large number of people, its contribution to the overall economic output and productivity remains relatively low.

 According to the Population and Housing Census of Bhutan (PHCB) 2017, the estimated population for 2022 is 763,249, showing a one percent growth from 2021. This population consists of 397,731 males accounting for 52.1 percent and 365,518 females accounting for 47.9 percent.

The Labor Force Survey (LFS) 2022 estimated the working-age population which is 15 years and above to be 484,965, accounting for 63.5 percent of the total population. On average, there are six potential workers for every ten individuals, indicating a higher level of economic support ratio for Bhutan.

In 2022, a significant portion of the working-age population, around 36.9 percent, remained economically inactive. Among the economically inactive population, 35.5 percent were students or trainees, 33.4 percent were engaged in family duties, and 16.7 percent were in the old age category.

 In terms of age groups, 39.9 percent of the inactive population belonged to the youth between 15-24 years, while 20 percent were in the old age category which is 65 years and above. The Labor Force Participation Rate (LFPR) decreased to 63.1 percent in 2022, marking a decline from 69.1 percent the previous year. This decrease can be attributed to the exit of individuals from the labor force, as evidenced by the increase in the inactive population.

According to the Population Projections of Bhutan 2017-2047, the ratio of the working-age population to the total population was 76.5 percent in 2022. The overall population data used in the Labor Force Survey 2022 was sourced from these projections.

The economically inactive population refers to individuals who neither worked nor sought or made themselves available for work during the reference period. The remaining inactive population includes individuals waiting for recall from a previous job, waiting for academic or job interview results, those who are ill or disabled, retired or pensioners, individuals lacking skills, those planning to pursue further studies or work abroad, and discouraged workers who are not interested in work or believe there are no job opportunities.

The LFPR is defined as the proportion of the economically active population to the working-age population.

According to the annual report, it was observed that there was a significant increase in the percentage of individuals attending family duty, reaching 33.4 percent in 2022 from 16.6 percent in 2021.

However, there was a concerning decrease in the female labor force, with a decline of 29,646 persons, resulting in a female LFPR of 53.5 percent in 2022 compared to 65.3 percent in 2021. On the other hand, there was a slight increase of 0.3 percentage points in the male LFPR, bringing it to 73.4 percent.

These findings highlight the need for further analysis and targeted interventions to address the gender disparities in labor force participation and ensure equal opportunities for all.

The report states that the LFPR was higher in rural areas accounting for 65.2 percent compared to urban areas accounting for 59.7 percent. This disparity was due to the higher participation of rural females accounting for 57.6 percent compared to urban females accounting for 46.8 percent, indicating a gender gap in LFPR.In urban areas, women tend to prioritize family duties, while rural women actively engage in agricultural activities.

The COVID-19 pandemic has had a significant impact on the labor market, with a 5.2 percent growth in GDP in 2022, but also an increase in the unemployment rate from 4.8 percent in 2021 to 5.9 percent in 2022.

Despite the significant LFPR in rural areas, particularly in agriculture, the primary sector experienced negative growth due to lower crop production and a slowdown in livestock growth.

These findings highlight the need for targeted measures to address gender disparities and mitigate the effects of the pandemic on the labor market.

The report reveals concerning trends in unemployment. In 2022, the total number of unemployed individuals reached 18,198, accounting for 5.9 percent of the population. This marks an increase from 16,254 unemployed individuals in 2021, which was 4.8 percent of the population.

 The rise in unemployment has been particularly striking among the youth, with the youth unemployment rate reaching 28.6 percent in 2022, compared to 20.9 percent in 2021. The increase in youth unemployment can be attributed to the growing number of new entrants into the job market, as well as reduced business activity and investment in the economy.

These trends highlight the need for targeted strategies to address the challenges faced by the labor market and provide opportunities for the youth.

Related Posts

About The Author