… however, its contribution to GDP grew

Thukten Zangpo

Agriculture sector’s contribution to the gross domestic product (GDP) has risen while the share of employment from the sector dropped over the years, according to the Royal Monetary Authority’s (RMA) annual report 2023.

Going by the figures, in the past six years, the sector’s share to the GDP saw an increase from 12.9 percent in 2017 to 14.7 percent (Nu 33.42 billion) of GDP in 2022. The country’s GDP was reported at Nu 227.81 billion in 2022.

Conversely, the sector’s share of employment saw a decline from 51.3 percent in 2017 to 43.4 percent of the total workforce in 2022. This was equivalent to 124,000 persons working in agriculture.

In the draft 13th Plan, the sector’s share to GDP target is Nu 58.7 billion, an increase of 43 percent from 2022 level at the annual growth rate of 8 percent.

This is because there has been a gradual economic transition from agriculture to the industry and service sectors in line to the global trend.

Rural areas’ major population, 64 percent, are working in the agriculture sector of which 53.3 percent of workers are female, comparatively higher than male workers at 36.1 percent. More than 70 percent of females in rural areas are engaged in agriculture.

However, the service sector employs the largest share at 76.6 percent, followed by the industry sector at 19.4 percent in urban areas.

Today, the agriculture sector has the lowest productivity than the industry and service sectors.

The report stated that traditional farming methods and topography pose significant challenges in increasing productivity and impediment to commercial farming.

Industry (excluding electricity and water) and service sector’s labour productivity was reported at 99.3 percent respectively, higher than the agriculture productivity at 95.5 percent.

Bhutanese in the agriculture sector work at least 56 hours per week compared to 54 hours each in industry and service.

Bhutanese mean working hours of 53 hours a week is higher than the International Labour Organisation’s standard of a maximum 40 hours per week and the Labour and Employment Act of Bhutan 2007.

About 62.7 percent of the employees work beyond 48 hours per week and 66.9 percent work more than 50 hours a week.

In terms of labour productivity, the gap in agricultural productivity (output per worker or GDP per person employed) saw a decreasing trend over the years. Agriculture labour productivity saw a decline to 4.5 percent in 2022 from a high of 7.5 percent in 2018.

This indicates that more labour has been shifting from agricultural to more productive sectors, which has the potential to enhance economic output. However, the RMA calls for action since the majority of the employment is still concentrated in agriculture and output remains the same.

It was also that the gross value added (GVA) per capita in agriculture in 2022 at Nu 267, 588 is about 10.4 percent below GDP per capita of Nu 298, 479. GVA measures the total value of goods and services produced in an economy.

However, the GVA per capita of non-electricity industry at Nu 1063, 256 and service sectors at Nu 976,117 was three times higher than the country’s GDP per capita.

In hourly earnings, agriculture showed improvement from Nu 82 per hour in 2021 to Nu 100 per hour in 2022.

However, it was lower than the non-electricity industry sector, increasing from Nu 305 to Nu 409 and the service sector from Nu 353 to Nu 361 during the same period.

As Bhutanese workers work more hours per week than the international standard, the labor productivity remains insufficient to earn adequate income for employees and at the same time falling short of delivering acceptable output for the employers without compromising decent employment for workers, the report stated.