Youth Unemployment in Bhutan

Youth unemployment has emerged as one of Bhutan's most urgent domestic challenges, testing the foundations of the Gross National Happiness development philosophy and prompting difficult questions about the trajectory of the country's modernisation. While Bhutan's overall unemployment rate has historically remained in the low single digits, the rate among young people aged 15 to 24 tells a starkly different story. According to the National Statistics Bureau's Labour Force Survey, youth unemployment stood at approximately 29 percent in 2022, having spiked above 33 percent during the COVID-19 pandemic in 2020-2021 — the highest levels ever recorded. Even in pre-pandemic years, youth unemployment consistently hovered between 10 and 15 percent, far exceeding the national average and ranking among the highest in South Asia.^[1]

The problem is structural rather than cyclical. Bhutan's economy, heavily dependent on hydropower exports to India and a limited domestic private sector, generates insufficient formal employment to absorb the approximately 10,000 to 12,000 young Bhutanese who enter the labour market annually. Meanwhile, the expansion of education — one of the great successes of Bhutan's development — has raised the expectations of young graduates who increasingly seek white-collar employment in government or corporate offices rather than manual or agricultural work. This mismatch between supply and demand, between aspiration and opportunity, sits at the heart of Bhutan's youth employment crisis and has become a central concern of policymakers, the monarchy, and civil society.^[2]

Root Causes: The Education-Employment Mismatch

Bhutan's modern education system, built largely since the 1960s under successive Five-Year Plans, has achieved remarkable gains in literacy and school enrolment. Primary enrolment is now nearly universal, and secondary and tertiary enrolment have expanded dramatically over the past two decades. The Royal University of Bhutan and its constituent colleges, along with private institutions, produce several thousand graduates annually in fields including business administration, IT, education, and the humanities. However, the economy has not diversified fast enough to create the professional and technical positions these graduates seek.^[3]

A 2019 study by the Royal Institute of Management found that more than 60 percent of unemployed youth held at least a Class XII qualification or higher, demonstrating that higher education attainment does not translate automatically into employability. The study also found significant skill mismatches: employers reported difficulty finding candidates with practical skills, critical thinking, and communication abilities, even as graduates reported difficulty finding suitable positions. The curriculum in many Bhutanese institutions has been criticised for being overly theoretical and insufficiently aligned with private sector needs.^[4]

Compounding the problem is the relatively small size of Bhutan's private sector. With a total population of approximately 780,000 and a domestic market constrained by mountainous geography and limited infrastructure, the country's private enterprises are predominantly small and micro-scale. The government, including the civil service, military, and state-owned enterprises, remains the largest formal employer, but public sector recruitment has been tightened since the mid-2010s as the government sought to control expenditure and reduce the fiscal deficit. The result is an expanding pool of educated young people competing for a limited number of desirable positions, while jobs in construction, agriculture, and services go unfilled or are taken by foreign workers, particularly Indian labourers.^[5]

Government Responses and Training Programmes

Successive Bhutanese governments have recognised youth unemployment as a priority issue and launched various programmes to address it. The Department of Employment and Human Resources under the Ministry of Industry, Commerce and Employment administers the national employment policy, which includes skills training, job placement services, and entrepreneurship support. The Technical and Vocational Education and Training (TVET) system, administered through the Ministry of Education and various specialised institutes, offers certificate and diploma programmes in trades such as electrical work, plumbing, automotive repair, carpentry, and hospitality. The government has sought to reduce the stigma attached to vocational training — traditionally viewed as a path for those who failed academically — by upgrading facilities, improving curricula, and linking TVET qualifications to employment opportunities.^[6]

The National Service Programme, launched in 2023, requires graduates unable to find employment within a set period to participate in community service placements across the country, combining productive activity with skills development. While proponents argue that it provides useful experience and reduces idleness, critics contend that it amounts to a temporary measure that does not address the structural mismatch between education and employment. The government has also expanded the Graduate Apprenticeship Programme, which places young graduates in private sector companies for six to twelve months, with the government subsidising a portion of their stipend to reduce the risk for employers.^[5]

An older and broader initiative is the De-Suung (Guardians of Peace) programme, established in 2011 by King Jigme Khesar Namgyel Wangchuck. While not primarily an employment programme, De-Suung provides young Bhutanese with skills training, discipline, and community service experience. It has been progressively expanded to include livelihood components and has been deployed for infrastructure projects, disaster response, and community development work, functioning as both a safety net and a socialisation mechanism for young people who might otherwise be idle.^[9]

In the 13th Five-Year Plan (2024-2029), the Royal Government identified economic diversification and private sector development as the primary long-term solutions to youth unemployment. Priority sectors include information technology and digital services, tourism, organic agriculture, and creative industries. The Digital Drukyul programme and the Gelephu Mindfulness City special administrative region are both presented as transformative initiatives that could generate thousands of new jobs in sectors aligned with the skills of educated young Bhutanese.^[7]

The Loden Foundation and Entrepreneurship

Among the most innovative responses to youth unemployment has been the work of the Loden Foundation, a Bhutanese non-profit established in 2007 with the mission of supporting entrepreneurship and social enterprise. The Loden Entrepreneurship Programme provides seed funding, business training, mentoring, and networking opportunities to aspiring Bhutanese entrepreneurs, with a particular focus on young people and women. By 2024, the programme had supported over 200 enterprises across all twenty dzongkhags, creating an estimated 1,500 direct jobs and demonstrating the potential of entrepreneurship as an alternative to government or corporate employment.^[8]

The Loden Foundation has also played an important role in shifting cultural attitudes toward entrepreneurship. In a society where government service has traditionally been considered the most prestigious career path, starting a private business was long regarded with ambivalence or even mild stigma. Through high-profile events such as the annual Loden Innovation and Entrepreneurship Awards, public awareness campaigns, and partnerships with educational institutions, the Foundation has helped normalise the idea that creating one's own enterprise is a worthy and viable career choice. Several Loden-supported businesses — in sectors ranging from organic food processing to IT services, eco-tourism to handicrafts — have become visible success stories that inspire younger cohorts.^[8]

Rural-Urban Migration and the Emigration Crisis

Youth unemployment is a primary driver of two interrelated demographic shifts that are reshaping Bhutanese society: rural-to-urban migration and international emigration. Within the country, young people are leaving rural communities in large numbers, drawn to Thimphu, Phuentsholing, and other towns by the perceived availability of jobs, educational opportunities, and modern amenities. This migration has accelerated the depopulation of rural areas, strained urban infrastructure, and contributed to rising housing costs in the capital. By 2023, more than 40 percent of Bhutan's population lived in urban areas, compared with less than 25 percent in 2005.^[1]

More dramatically, the difficulty of finding satisfactory employment at home has fuelled a surge in emigration, particularly to Australia, where Bhutanese can obtain student visas that permit part-time work. Estimates suggest that between 50,000 and 80,000 Bhutanese — roughly 7 to 10 percent of the population — were living abroad by 2024, a figure that has alarmed the government, the monarchy, and the public. His Majesty King Jigme Khesar Namgyel Wangchuck has publicly addressed the emigration trend, describing it as a threat to the country's social fabric and calling on young people to contribute to national development while also urging the government to create conditions that make staying in Bhutan attractive.^[5]

The emigration trend creates a complex feedback loop: as young, educated Bhutanese leave, the domestic talent pool shrinks, making it harder for the private sector to grow and create the jobs that would keep future graduates at home. Remittances from abroad do contribute to household incomes, but they do not substitute for the entrepreneurial energy, skills, and community engagement of the young people who have left. The government has begun exploring incentive programmes to encourage returnees, including facilitated re-entry into government service and preferential access to business loans, but these remain in early stages.^[2]

Gender Dimensions

Youth unemployment affects young women disproportionately. The National Statistics Bureau data consistently shows that female youth unemployment rates exceed male rates by several percentage points, reflecting a combination of factors including cultural expectations, limited mobility, and the concentration of job creation in male-dominated sectors such as construction and transport. However, women have also been prominent among the beneficiaries of entrepreneurship programmes and TVET initiatives, and female labour force participation in Bhutan is higher than in many South Asian countries, partly due to the bilateral inheritance system and the relatively egalitarian nature of Bhutanese rural society.^[1]

Looking Ahead

Addressing youth unemployment requires a complex approach that goes beyond short-term employment schemes. Analysts and policymakers broadly agree on the key elements: accelerating private sector growth through regulatory reform and access to capital; aligning education and training curricula more closely with market needs; investing in sectors with high employment potential, particularly IT, tourism, and value-added agriculture; and creating an enabling environment for entrepreneurship. The success of the Gelephu Mindfulness City project, which aims to establish a new economic hub with special economic zones, will be an important test of whether Bhutan can generate the scale of economic activity needed to absorb its growing workforce.^[7]

The youth unemployment challenge is ultimately a test of the Gross National Happiness model itself. If the framework is to deliver on its promise of holistic well-being, it must provide the country's largest demographic cohort with meaningful livelihood opportunities — not merely jobs, but work that provides dignity, purpose, and the ability to contribute to the national vision. As Bhutan navigates this challenge, the stakes extend beyond economics to the very social cohesion and cultural continuity that GNH was designed to protect.