Bhutan will have a one time opportunity to capitalise on the increasing number of youth up to 2042 as its dependency ratio plummets.
The only condition is that it has to create 8,000 jobs on average every year to reap the demographic dividend, according to the National Statistical Bureau report ‘Harnessing Demographic Dividend in Bhutan’ released yesterday.
Considering the population dynamics and its consequences on the economic development in future, the National Statistics Bureau (NSB) has analysed the population projection data from Population and Housing Census 2017 and published the report on harnessing demographic dividends both at national and sub-national levels.
The United Nations Population Fund defines demographic dividend as the economic growth potential from shifts in a population’s age structure, mainly when the share of the working-age population is bigger than the non-working-age share.
The country’s population increased from 634,000 in 2005 to 735,000 in 2017 and this is expected to reach a peak of 883,000 in 2047. The rate of natural increase of 0.88 in 2017 is projected to drop further to 0.27 by 2047.
The projected age-sex distribution (2017 – 2047) by broad age group reveals that the share of the young population (below 15 years of age) will fall from 26 percent to 17 percent and that of elderly population (age 65 and older) will rise from 6 percent to 13 percent between 2017 and 2047. The young population is also projected to decline from about 189,000 to 151,000 during the same period.
For some time, the share of the working-age population (15-64 years) will however, rise to over 70 percent and the dependency ratio fall to about 40 percent during 2027-2042.
NSB’s Chief Statistical Officer of Social Statistics Division, Tashi Dorjee said, “This provides a huge demographic dividend. However, the window of demographic opportunity will begin to close after that, as the share of the working-age population will decline.”
The analysis of population projections by age until 2047 shows the size of the working-age population will peak at 615,000 by 2042 and thereafter it will start declining due to large number of people moving to old age category.
“As a result, the annual growth rate of the working-age population will be higher than that of the total population until it coincides with each other in 2032,” Tashi Dorjee said.
He said while the overall population would continue to grow due to the population momentum, the growth rate of the working-age population will start declining due to ageing after 2042.
The share of elderly is estimated to continue to rise and is expected to cross 100,000 by 2043.
Implication on Future employment
The total labour force is projected to grow from 341,000 in 2019 to 435,000 in 2042 and thereafter decrease to 434,000 in 2047. The labour force would be further expected to decrease after 2047.
“Considering an ideal zero-unemployment scenario where everyone in the labour force is employed, Bhutan will need to create 13,000 jobs in 2019 in addition to those already employed,” Tashi Dorji said.
In the next three years, there will be an addition of about 20,000 people to the labour force which comes out to 32,000 jobs from between 2019 to 2022 or roughly about 8,000 jobs per year.
“As the widow of opportunity to harness the demographic dividend opens up for Bhutan, the number of additional jobs required increase to 30,000 in 2027.”
This means that an additional 30,000 jobs need to be created between 2022–2027 assuming that the surplus labour in the preceding years have all been employed.
In the next five years after 2027, the number of additional jobs required would decrease to 23,000.
“If the number of jobs is created to accommodate the new entrants into the labour force by 2047, it is projected that there will be surplus of jobs. However, it is important to realise that about 110,000 jobs need to be created between 2019 and 2042. On an average, it is roughly about 5,000 jobs per year for the next 24 years.”
The report recommends the government invest in the human capital to equip youth with skills, diversify the economy and accordingly plan for preparing the human resources to reap the benefits of demographic transition.
“Due to regional imbalances in the demographic dividend owing to less number of workers in the eastern region, the dependency ratios are higher and will remain high in coming decades. This calls for strengthening the social security measures in all dzongkhags in that region to strengthen mechanisms of taking care of the elderly,” the report stated.
Developing regional hubs to diversify equitable population distribution and decongestion in the larger towns, creating additional jobs in coming future, improving female labour force participation, and plan for occupational diversification are also recommended.
“Keeping the pace of digital development, Information and Technology (IT) sector needs to be developed along with planning of job creation in many other sectors such as care services. Due to population ageing, care economy has to be developed as more and more number of elderly will require various kinds of services in future.”
The report also recommends the government to establish a Think Tank and Sectoral Tasks Forces to Translate Vision into Action. “There is a need to have a central body of think tank, comprising of experts from various fields and relevant stakeholders, which will suggest feasible options, plans and programmes for future as well as keeping an eye on the execution of such initiatives,” Tashi Dorjee said.
NSB director Chhime Tshering said, “The studies contribute towards meaningful interpretations and policy dialogues among the policy makers, development implementers, stakeholders and the public.”