Unemployment rate soars to record high of 5 percent

An increasing trend in unemployment rate has been observed over the years except for the year 2019.

This is the biggest and most acute shock since the first Labour Force Survey (LFS) was conducted in 1988

Lhakpa Tshering

As curbs to contain the coronavirus continue to hurt the job market, the unemployment rate in the country soared to 5 percent in 2020 shattering all previous records and hitting the highest level since the first Labour Force Survey (LFS) was conducted in 1988.

The number of people employed fell at the sharpest pace to 95 percent – 314,562 people for the first time and 16,660 persons of the total 331,222 economically active persons were without work and actively seeking and available for work during the reference period – November and December.

An increasing trend in unemployment rate has been observed over the years except for the year 2019. Since there is no overlap in the confidence interval, the difference in the unemployment rate estimated is statistically significant. And it has drastically increased by 2.3 percent in 2020.

A senior Statistical Officer with NSB, LekiWangdi, said that the unemployment rate has increased in terms of both the percentage and absolute numbers. “The number is close to 100 percent compared to the previous year,” he said.

Many of the Covid-19 layoffs that make up 19 percent of unemployed persons are men while 19.5 percent completed their studies recently, 16 percent lacks adequate qualification and 10.8 percent lacks experience.

The high unemployment rate in 2020 could be attributed to the impact of the Covid-19 pandemic on businesses and the service sector. The rate would have been much higher had it not been for the timely intervention by the government under the leadership of His Majesty the King, according to the 2020 LFS report, released on 2 April by National Statistics Bureau (NSB).

While tourism sectors slashed hundreds of jobs in a desperate bid to reduce costs as the coronavirus pandemic forces businesses into survival mode, persons on temporary layoff are not included among the unemployed on the grounds that they were engaged in different works while conducting the survey.

LekiWangdi said that although tourist guides and drivers were laid off, they could be engaged through various plans and programs such as economic contingency and Covid-19 response plan. “These have somehow given livelihood for them,” he added.

To be considered as unemployed, he went on to say that the person must be without a job, must be seeking work, and must be available for work if there is an opportunity during the reference period. “Only if one fulfills these three conditions, they were considered unemployed,” he added.

The report also highlights that the Covid-19 pandemic has profoundly affected employment everywhere. “It has greatly reduced the employment opportunities for those unemployed since the business and service sectors remained closed,” it stated.

“This was further aggravated by the overseas returnees and those layoff employees by the affected sectors,” it stated. “Notably, the tourism and hospitality industry was the worst hit by the pandemic.”

According to the statistics data, of the total employed persons, 220,406 persons or 70.1 percent live in rural areas and 94,156 persons or 29.9 percent in urban areas. Besides, 41.9 percent are in the age range between 25 to 39 years.

Female unemployment is statistically significant which is 6 percent and is higher than that for males with 4.1 percent. The unemployment rate for urban areas stands at 10.1 person which is four times higher than that of rural areas with 2.7 percent.

The analysis shows that Thimphu has a record unemployment rate of 12.3 percent followed by Paro with 9.4 percent, Chhukha with 5.8 percent, and 5.2 percent for Punakha. Thimphu and Chhukha also have the highest unemployed persons with 1,892 and 1,637 persons respectively in terms of distribution.

The survey shows that the highest unemployment rate is observed amongst persons with bachelor’s degree with 17.8 percent, followed by higher secondary with 16.3 percent while diploma education level has 10.6 percent.

Youth unemployment

The youth aged between 15 to 24 years unemployment rate is estimated at 22.6 percent for the first time in the labour survey history which is 6,922 persons. Female continues to outnumber male with 4,245 persons accounting 61.3 percent and 2,676 persons or 38.7 percent respectively.

The youth unemployment rate over five years has been fluctuating with the highest rate observed in 2020 and lowest in 2019 which was 11.9 percent.

While the report noted that investment in employment creation has been the top priority over the years for the government, it stated that involvement and investments from the private sector play an equally important role in solving youth unemployment issues.

Also, the report highlighted that youth has the potential to impact economic growth, development, and stability. “If overlooked, youth unemployment can lead to social exclusion,” it stated.

The report showed that some 4,201 persons or 60.7 percent of unemployed youths are found in urban with the highest in Thimphu accounting 37.1 percent followed by Paro with 29.6percent, PemaGatshel with 27.8 percent, Sarpang with 25.3percent, Dagana with 24.8 percent and Chhukha has 24.2 percent.

In terms of distribution, Thimphu has the highest number of unemployed youths which 2,828 persons followed by Paro with 721 persons, and Chhukha with 604 persons.

Of the total unemployed youth, 45.7 percent has completed higher secondary education followed by bachelor’s degree with 23 percent while middle secondary comes in third with 17.2 percent.

The survey covered 9,012 households that were selected from twenty dzongkhags of which 3,420 or 38 percent households were in urban and about 62 percent 5,592 households were in rural areas.