𝐏𝐨𝐬𝐭-𝐋𝐃𝐂 𝐓𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧 𝐁𝐫𝐢𝐧𝐠𝐬 𝐘𝐨𝐮𝐭𝐡 𝐄𝐦𝐩𝐥𝐨𝐲𝐦𝐞𝐧𝐭 𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 𝐓𝐨 𝐓𝐡𝐞 𝐅𝐨𝐫𝐞

…𝑨𝑫𝑩 𝒓𝒆𝒑𝒐𝒓𝒕 𝒉𝒊𝒈𝒉𝒍𝒊𝒈𝒉𝒕𝒔 𝒕𝒉𝒆 𝒏𝒆𝒆𝒅 𝒇𝒐𝒓 𝒊𝒏𝒄𝒍𝒖𝒔𝒊𝒗𝒆 𝒋𝒐𝒃 𝒑𝒂𝒕𝒉𝒘𝒂𝒚𝒔 𝒂𝒏𝒅 𝒔𝒕𝒓𝒐𝒏𝒈𝒆𝒓 𝒔𝒖𝒑𝒑𝒐𝒓𝒕 𝒇𝒐𝒓 𝒐𝒑𝒑𝒐𝒓𝒕𝒖𝒏𝒊𝒕𝒚-𝒅𝒓𝒊𝒗𝒆𝒏 𝒆𝒏𝒕𝒓𝒆𝒑𝒓𝒆𝒏𝒆𝒖𝒓𝒔𝒉𝒊𝒑

By Kezang Choden

Bhutan is experiencing a major economic transition following its graduation from least developed country status in December 2023. According to the Asian Development Bank (ADB), the country now faces a critical need to strengthen inclusive and sustainable growth while adjusting to structural changes in its labor market.

The ADB report notes that Bhutan’s young, educated, and digitally literate population presents both a powerful opportunity and a growing challenge. Despite having one of the most educated youth populations in South Asia, Bhutan continues to record one of the region’s lowest youth employment rates. The number of young people not engaged in employment, education, or training (NEET) has also increased in recent years, while other South Asian countries have shown improvement.

Analysts point out that the issue does not stem from an oversupply of workers but rather from a lack of structured and gender-inclusive pathways linking education to employment, particularly outside the public sector. Many young Bhutanese continue to face underemployment, job insecurity, and limited access to decent work despite their higher education levels and aspirations for stable livelihoods.

Entrepreneurship has often been viewed as a solution to youth unemployment and a means to diversify the economy. However, the ADB report reveals that youth entrepreneurship in Bhutan remains underdeveloped and is largely driven by necessity rather than opportunity. Many young business owners struggle to expand or sustain their ventures due to financial constraints and limited market access.

The report also highlights gender disparities in entrepreneurship. Young women, in particular, face greater barriers such as lack of access to finance, inadequate business networks, and limited childcare support. Yet when given the right conditions, they show strong potential to succeed and contribute to economic growth. According to the ADB, entrepreneurship alone cannot solve youth employment challenges. The government should also focus on expanding opportunities within the formal private sector and investing in quality, sustainable, and inclusive support systems for young entrepreneurs.

Youth employment in Bhutan continues to remain below the regional average, though gradual signs of improvement are visible. The country’s overall employment-to-population ratio stands at 63 percent, higher than South Asia’s 52 percent, largely driven by stronger female labor force participation. However, among the youth, the employment-to-population ratio is only 26 percent, compared to the regional average of 29 percent.

Over the past decade, nation’s youth employment gap has narrowed, suggesting a positive convergence trend even as many neighboring countries struggle to keep pace. Despite this progress, youth employment remains more sensitive to economic shocks. During the COVID-19 pandemic, youth employment fell by 5.4 percent, while adult employment declined by only 1.5 percent.

At the same time, the share of young people not in education, employment, or training has risen in the country, diverging from global and regional improvements. The global NEET rate dropped from 21.5 percent in 2018 to 20.4 percent in 2023, and South Asia’s from 29.8 percent to 26.4 percent. In contrast, Bhutan’s NEET rate increased from 15.2 percent to 19.7 percent. Although still below the regional average, the rising trend points to growing concern.
Analysts highlight that structural disadvantages and limited effectiveness of youth employment policies continue to restrict opportunities for young workers. Strengthening vocational programs, improving job-matching systems, and creating youth-centered employment initiatives are seen as vital to ensure that young population can contribute meaningfully to the nation’s economic transformation.

Young entrepreneurs in the country are earning more than their salaried counterparts, with the income gap widening as they grow older. According to recent findings, entrepreneurs aged 15 to 24 earned about 13 percent more than wage workers in the same age group in 2023. The difference grew to nearly 30 percent among those aged 25 to 34, reflecting the growing profitability of self-employment as experience increases.

Within this group, female entrepreneurs stood out by outperforming both male entrepreneurs and senior male employees. Their success highlights the strong economic potential of women when given equal opportunities and access to resources. Earnings gaps by gender, however, continue to show sharp contrasts across age and employment types. While the gender gap was relatively small among youth, it expanded to 31 percent among entrepreneurs aged 35 to 63. Notably, women entrepreneurs aged 25 to 34 were among nation’s highest earners.

Sonam Tobgay, 29, from Gangzur Gewog under Lhuentse Dzongkhag, shared that after completing Class 12, he decided to stay in his village to pursue his passion for traditional handicrafts, particularly mud pottery, a craft deeply tied to Gangzur’s cultural identity. “By selling my products at local markets and fairs, I gradually turned this traditional skill into a small business that helps promote our culture while generating income,” he said.

Sonam explained that market access is not an issue, as customers appreciate and purchase the products. The main challenge, however, lies in meeting the growing demand due to limited production capacity. He added that many potters also require proper training to improve their skills. Financial support is therefore crucial to organize training programs and increase production to meet customer demand.

Despite this progress, challenges remain for younger women in business. Female entrepreneurs aged 15 to 24 faced the largest gender productivity gap at 19 percent. Analysts suggest that limited work experience and structural barriers continue to restrict their early-stage potential, highlighting the need for stronger support systems to help young women succeed in entrepreneurship.

Most young entrepreneurs in the country are motivated by opportunity rather than necessity, reflecting a growing shift toward proactive and innovation-led business creation. Recent data shows that nearly two-thirds (64.5 percent) of new entrepreneurs aged 25 to 34 entered business to pursue opportunities, while just over one-third (35.5 percent) did so out of necessity. Among younger youth aged 15 to 24, however, necessity-driven entrepreneurship remains more common, accounting for 45.3 percent of new entrants. This trend highlights the limited formal employment options and lower levels of work experience faced by younger Bhutanese.

Earnings data further demonstrate the advantages of opportunity-driven entrepreneurship. Across all years, those who started businesses out of opportunity consistently earned more than their necessity-driven peers. The difference is especially evident among women. Between 2018 and 2022, average monthly earnings for female opportunity entrepreneurs nearly doubled from Nu 17,345 to Nu 33,849, making them the highest earners in their category. By contrast, male opportunity entrepreneurs saw their earnings level off at around Nu 25,000.

These findings suggest that promoting the transition from necessity to opportunity entrepreneurship could strengthen both earnings and gender equity. However, such progress depends on improvements in productivity and workload. Many necessity entrepreneurs have reduced the income gap by working longer hours, though their productivity and earnings remain less stable. Efforts to help these entrepreneurs enhance business efficiency, rather than simply increase labor input, will be crucial for sustaining income growth and supporting nation’s broader economic development.
As country moves forward in its post-LDC journey, building a more inclusive labor market and nurturing opportunity-driven entrepreneurship, especially among youth and women, will be essential for achieving sustainable growth and a resilient economy.