Agriculture sector employs nearly half of the country’s workforce. However, it is the least productive sector in the country.
According to the Royal Monetary Authority’s (RMA) recent annual report, the agriculture sector employed 158,511 persons, equivalent to 49.2 percent of the total labour force in 2021.
However, the sector contributed only one-fifth or 19.2 percent (Nu 36.04 billion) to the country’s gross domestic product (GDP).
The country’s GDP was recorded at Nu 187.77 billion (B) in 2021.
Although agriculture’s share to GDP increased from 14 percent and 19.2 percent in 2015 and 2021 respectively, employment share declined from 58 percent to 49.2 percent.
This is because there has been a gradual economic transition from agriculture to the industry and service sectors.
The agriculture sector today has the lowest labour productivity compared to the industry and service sectors.
Lower labour productivity in the agriculture sector, the report points out, was because of the lack of diversity, low technology and mechanisation. Higher labour productivity in the service sector was driven by the electricity sector which was largely capital-intensive.
Bhutanese in the agriculture sector work at least 52 hours a week compared to 49 hours for those in the industry and service sectors, according to the report.
Bhutanese working 53 hours per week on average is higher than the international standard of a maximum of 40 hours per week.
In hourly earnings, the agriculture sector saw an increase from Nu 86 per hour in 2020 to Nu 91 per hour in 2021, which was attributable to the various government initiatives to improve agricultural productivity.
However, it was lower than the service sector and non-electricity sector of Nu 284 and Nu 315 earnings per hour in 2021.
Agriculture sector’s per-income earnings relative to GDP per capita at Nu 227,346 is about 9 percent below GDP per capita of 248, 334 in 2021.
On the other hand, non-electricity industry, and service sectors’ per income earnings relative to GDP per capita at Nu 764,998 and 724,654 was three times higher than the GDP per capita.
Electricity, transport and communications, and financial services are the growth-intensifying sectors with a small share to employment creation.
Electricity contributed 17.1 percent to GDP while there was only 1.3 percent to employment in 2021. Transport and communications, and financial services contributed to 9.8 percent and 8.1 percent respectively to GDP. However, they only contributed 3.6 percent and 1.5 percent to employment.
At the same time, manufacturing, hotel and restaurant activities had a higher contribution to employment generation than to GDP.
The report stated that the agriculture, manufacturing and hotel and restaurant sectors, continue to remain the key sectors with the potential to generate employment in the post-pandemic period.
However, the loan to the agriculture sector was Nu 6.33B or 3.4 percent of the total loans in 2021-22, reflecting a low level of investment in agriculture compared with other sectors.
The agriculture productivity gap, which is the ratio of a nominal value-added per worker in non-agriculture to that in agriculture, was recorded at 4.1 percent in 2021, according to the report. This gap indicates misallocation of labour in the economy.