Despite heavy investment in education, available jobs remains vacant and educated youth remain unemployed.
According to the World Bank’s working paper, Bhutan Development Report, government spending on education ramped up from 5.1 percent of GDP in 2013 to 6.7 percent in 2016. The report states that Bhutan’s spending on education is higher than neighboring countries, showing significant commitment to investment in human capital.
However, the unemployment rate for educated youth (with bachelor’s degree) stood at 67 percent in 2016, although the overall youth unemployment rate was 13.2 percent. Bhutan’s public sector provides about 20 percent of the total jobs packaged with better monetary and non-monetary benefits than the private sector.
“While hydropower will remain dominant in the foreseeable future, Bhutan’s demographic transition requires more concerted efforts to develop the private sector,” the report suggests.
Even in a conservative scenario, the World Bank states that hydropower generation is likely to triple from 1,606 MW in 2017 to 5,300 MW in 2023.
At the same time, the share of working-age population is projected to increase from 65 percent in 2010 to 71 percent in 2025. In other words, about 8,000 people will enter the labor market every year, and most of them will be better educated than the previous generation.
“Therefore, it will be important to create good quality jobs for the working-age population to ensure sustainable and inclusive development in the future,” the report states.
The hydropower sector, which is capital intensive, employs only 0.8 percent of the labour force, and there is extensive use of foreign labour in hydropower construction. The structure of employment remains overwhelmingly agrarian accounting for 70 percent of the jobs in the private sector.
This, according to the World Bank, reflected lack of job opportunities for the youth.
The country’s human capital is also assessed based contribution of health and education to the productivity of the next generation of workers.
Going by the parameters of the Human Capital Index of World Bank, both education and health sub-indices suggest room for improvement. However, due to data constraints, Bhutan’s ranking is not assessed.
The report states that in the last two decades, Bhutan has achieved noteworthy improvements in health, but critical challenges remain.
Although health and nutrition outcomes are among the best in South Asia but disparities exist. For instance, infant and under- five mortality is higher in the eastern region than in the western and central regions and under-five mortality in rural areas is twice that in urban areas. The prevalence of stunting is still high, with every fifth child under five being stunted.
As the country develops, significant changes in lifestyle are occurring, leading to the emergence of new health challenges. Non-communicable diseases (NCDs) are increasing and account for more than 70 percent of the reported disease burden. “This poses a significant risk to people’s health in their productive years. Mental health problems including alcoholism and suicides are on the rise, owing to sociocultural changes, growing urbanisation, migration and unemployment,” the report stated.
The World Bank states that public spending on health during FY2013-16 remained at about 2.7 percent of GDP and was largely focused on building adequate infrastructure for the delivery of health care services.
Three sub-indicators, probability of survival to age 5, expected years of school, and adult survival rate show that Bhutan is in the third quartile and one sub-indicator, fraction of children under 5 not stunted is close to the third quartile.
According to the report, Bhutan’s expected years of schooling, those who have completed 9.4 years of schooling by the age of 18 years, is lower than what would be expected for its income level.
This has been reflected in Bhutan’s low gross tertiary enrolment rate compared to neighbouring countries. As of 2016, 63 percent of Bhutan’s labour force lacked formal education and only 5 percent completed some form of tertiary education.
The World Bank found that there is no comprehensive policy to handle human capital, limited participation of the private sector in the education and health sectors and less collaboration between private sector and colleges.