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Employment: Growing unemployment in Bhutan can be attributed to several intra-personal and societal reasons. The demand and preference to join the public sector by jobseekers is one of the main reasons for the rising unemployment problem, especially among the youth and highly educated people.

Bhutan’s private sector underdeveloped: WB

Employment: Growing unemployment in Bhutan can be attributed to several intra-personal and societal reasons. The demand and preference to join the public sector by jobseekers is one of the main reasons for the rising unemployment problem, especially among the youth and highly educated people.

The scenario is further aggravated by the country’s underdeveloped private sector.

A report titled, Bhutan’s Labour Market: Towards Gainful Quality Employment for All, released by the World Bank in collaboration with the labour ministry states that the public sector accounts for about a fifth of all jobs and almost half of the jobs outside agriculture.

“As only 43 percent of the country’s workers are employed outside agriculture, and public sector employment is entirely non-agricultural, almost half of all jobs outside agriculture are in the public sector,” states the report.

In addition, the report states public sector workers have relatively secure, well-paying jobs and access to education and labour related social protection programmes.

The public sector also employs a large number of young, relatively well-educated and well-off individuals often in the urban areas. Almost 48.3 percent of public sector workers are aged 15 to 34 followed by 4.3 percent of workers above 55 years.

Sixty-six percent of workers with tertiary education are employed by the public sector. With regards to location, 52.4 percent of private sector jobs outside agriculture and 98.4 percent of private sector jobs are located in rural areas while, less than one third (32.6 percent) of the public sector jobs are located in the rural areas.

World Bank resident representative, Yoichiro Ishihara, during the launch of the report yesterday said that the country’s private sector already faces difficulties in being competitive. “In the coming years, these difficulties might become even more severe if labour market challenges are not managed and addressed consciously.”

Globally, according to the report, the private sector is the main engine of job creation and the source of almost nine out of ten new jobs. “A prosperous private, non-agricultural sector is seen by many as an important engine for growth, development and jobs that can gradually improve a firm’s productivity and worker’s living standards and protection,” states the report.

According to the report, Bhutan’s labour market is stratified into three sectors: the public, the private non-agricultural and the private agricultural sectors.

While the country’s agricultural sector is shrinking in relative terms, the report states that it is still large and will continue to dominate employment for years. In 2014, 57 percent of the workers were active in agriculture.

The private non-agricultural sector lies somewhere in between the two sectors, struggling to develop largely because of competition for well-educated workers from the public sector and also because of its high cost base and insufficient productivity. “This sector remains underdeveloped and accounts for only a quarter of all jobs, barely more than half of those outside agriculture.”

The World Bank senior social protection specialist, Jasmine Rajbhandary said: “Taken holistically, the report’s recommendations identify a way for Bhutan to take a development path that redefines the balance between the public and private sectors by establishing a smart partnership between the two.”

The report highlights that an oversized public sector is particularly problematic for a small, landlocked country such as Bhutan that has a relatively undeveloped private sector.

“If Bhutan wants to avoid the plight of other resource-rich countries that rely on the public sector to provide jobs for their citizens, a comprehensive approach to sectorial rebalancing is needed – not to weaken the public sector but to allow private sector to emerge and prosper,” stated the report.

According to the 13th National Labour Force Survey, the national unemployment rate in 2015 stood at 2.5 percent. The youth unemployment rate was recorded at 10.7 percent.

The report recommends outsourcing a larger proportion of non-core government activities such as maintenance or IT services. The report states that the initiative could go a long way towards providing new opportunities for the private sector and at the same time it would serve to increase the efficiency of spending.

It also recommends that the non-farm private sector needs more predictable and systematic access to complementary foreign labour to compensate for the shortage of domestic labour, both skilled and unskilled.

Younten Tshedup 

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One comment

  1. Development practitioner

    I have tried to identify few major issues that handicap development of private sector. Ironically the international organizations have also brushed aside many of the issues. Those interested may take look at my blog http://sangpatamang.blogspot.com/2016/05/why-do-you-think-jaigaon-is-booming.html

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