Yangyel Lhaden
More than one-third, or around 35 percent, of the country’s working-age population is economically inactive, according to the fourth Labour Force Survey Quarterly Report (LFSQR).
The economically inactive population refers to individuals within the working-age group who neither worked nor sought employment during the survey period, which includes full-time students, individuals engaged in household work, retirees, the elderly, and those who are infirmed or disabled, among others.
Comparing the four quarters of the LFSQR 2024, 36 percent of the working-age population was economically inactive in the first quarter. This figure rose to 38.1 percent in the second quarter and dropped to 34.8 percent in the third quarter. In the fourth quarter, the inactivity rate slightly increased to 35.2 percent. Across all four quarters, at least 35 percent of the working-age population was economically inactive, highlighting a persistent trend.
The working-age population, defined as individuals aged 15 and older, showed varying trends over the year.
In the fourth quarter, the working-age population was 596,970, a decrease of 3,442 compared to the third quarter, which recorded 600,412 individuals. In the second quarter, there were 596,926 working-age individuals, and the population in the first quarter was 600,412. Despite these fluctuations, the economically inactive population in the fourth quarter stood at 210,219 individuals.
Similar trend with first three quarters, the fourth quarter also recorded the number of economically inactive women is nearly double that of men. Of the total inactive population, 81,256 are men, and 128,964 are women.
In urban areas, 89,147 individuals were economically inactive, compared to 121,964 in rural areas. The inactivity rate increases with age and is higher in rural areas, reflecting fewer employment opportunities outside urban centers.
The labour force participation rate (LFPR), which represents the percentage of people who are either employed or actively seeking employment, stood at 64.8 percent in the fourth quarter, meaning 35.2 percent of the working-age population did not participate in the workforce.
By gender, the LFPR was higher among men at 74 percent compared to women at 54.6 percent. By area, rural areas had a higher LFPR at 67.1 percent than urban areas, which had 61 percent.
Urban areas consistently had a smaller proportion of inactive population. In the first quarter, 92,262 individuals were inactive in urban areas, which increased to 99,965 in the second quarter. By the third quarter, it decreased to 90,717 and dropped further to 89,147 in the fourth quarter.
Labour force participation peaks during midlife, with 86 percent of those aged 40–44 actively engaged in the workforce in the fourth quarter. Participation is lowest among the youngest group, aged 15–19, at just 8.2 percent, likely due to educational commitments.
After age 55, participation declines steadily, with only 36 percent of those aged 65 and older still working.
This decline aligns with Bhutan’s ageing population and its declining fertility rate, signaling potential workforce challenges ahead.
Bhutan is on track to transition into an ageing society by 2027, with the elderly population projected to reach 7.4 percent of the total population. By 2050, this proportion is expected to rise to 14 percent, marking the country’s shift into an aged society.
According to the UNFPA’s 2022 report, “Population Ageing in Bhutan: Current Situation and Future Prospects,” the number of elderly people is expected to more than double, from 50,715 in 2022 to 118,650 by 2047.
At the same time, Bhutan’s fertility rate has declined sharply, from six children per woman in 1982 to just two in 2023—below the global population replacement level of 2.1 births per woman.
The report states that the repercussions of an ageing population are vast and varied. In terms of economic consequences, an ageing population often means slower economic growth and a smaller workforce. This can lead to a decrease in tax revenue for the government and can also put a strain on social welfare programmes.