Education Without Jobs: Why Bhutan’s Youth Turn to Precarious Entrepreneurship

Bhutan’s graduation from least-developed country status in 2023 was hailed as a milestone, but it has also underscored the country’s urgent need to address rising youth exclusion from jobs and skills opportunities. A recent paper by the Asian Development Bank’s Economic Research and Development Impact Department, authored by Carlos Alberto Coca Gamito and Silvia Garcia Mandico, reveals the scale of the challenge. Drawing on data from Bhutan’s Labor Force Surveys (2018–2023) and the 2024 Jobs and Skills Survey, the study finds that while Bhutan’s young people are more educated and digitally literate than ever, their labor market outcomes lag. Many are neither in employment, education, nor training, and entrepreneurship, though often promoted as a solution, remains mostly necessity-driven, short-lived, and poorly supported.

An Education Boom Without Job Rewards

The report highlights that Bhutan’s youth employment rate stood at just 26 percent in 2023, lower than the South Asian average of 29 percent. More worryingly, the number of young people classified as NEET rose from 15.2 percent in 2018 to 19.7 percent in 2023, bucking regional and global improvements. The mismatch between rising education levels and weak job creation is stark. Men generally move into salaried positions, often in the public sector, while women face higher inactivity, unpaid family work, or fragile self-employment. This divide underlines the absence of structured school-to-work pathways, particularly outside government service. Meanwhile, aspirations remain high. Nearly two-thirds of youth expect to earn over Nu25,000 a month within five years, but average earnings remain closer to Nu9,000. The frustration is compounded by low job quality: more than half of young workers report overtime, few have paid leave, and the share of low-paid youth has nearly doubled in just five years, particularly in services, where expectations of better wages have not been met.

Public Sector Dreams and Migration Pressures

The study reveals a deep cultural preference for public sector employment. Between 2018 and 2020, more than one in five unemployed individuals turned down private sector job offers, waiting instead for government posts. For youth aged 15–24, the figure was even higher: 84 percent rejected private opportunities, overwhelmingly citing job security concerns. This strong risk aversion reflects not just preference but a lack of safety nets for those entering private or self-employment. At the same time, migration has become a major outlet for young people. An extraordinary 93.7 percent of youth say they are willing to relocate for work. While internal migration to Thimphu dominates, over 21 percent are considering moving abroad, with Australia, the United States, the Middle East, and Canada top choices. Migration offers short-term relief through remittances and reduced labor pressures, but it also threatens long-term growth and risks draining Bhutan’s talent pool.

Entrepreneurship: A Fragile Lifeline

Entrepreneurship stands out as both a promising and precarious pathway. On average, young entrepreneurs earn more than salaried workers, with the advantage widening as they age. Women between 25 and 34 years old running businesses are among the country’s most productive and highest earners, surpassing men and even senior employees. But this success is uneven. Nearly half of entrepreneurs aged 15–24 start businesses out of necessity, excluded from wage jobs, while older groups lean more toward opportunity-driven ventures. Opportunity-driven entrepreneurs consistently outperform their necessity-driven peers, particularly women, whose average monthly earnings doubled between 2018 and 2022 to reach Nu33,849. Yet, the advantage is fragile. Productivity benefits vanish when entrepreneurs work more than 40 hours a week, raising concerns about burnout and unstable incomes. Sectoral data show a broad move out of agriculture into services and industry. By 2022, nine in ten female opportunity entrepreneurs were concentrated in services, while men were more evenly spread into manufacturing and construction. These shifts reflect Bhutan’s structural transformation but also highlight persistent gender segregation in entrepreneurship.

Unlocking Potential Through Policy Action

Perhaps the greatest challenge lies in sustaining youth-led ventures beyond the start-up phase. While the number of potential entrepreneurs rose sevenfold between 2018 and 2022, the number of nascent entrepreneurs fell, and few advanced into established business ownership. Young people dominate at the aspirational and early stages but fade quickly at later stages, constrained by a lack of finance, mentorship, and business support. Women, who were once the majority of entrepreneurs in 2018, now face declining representation, especially at the entry point. These patterns suggest that Bhutan’s current ecosystem promotes start-ups but does little to help them grow or consolidate.

The stakes are high. Calculations suggest that shifting from necessity-driven to opportunity-driven youth entrepreneurship could add the equivalent of 1.4 percent of GDP, about Nu2.8 billion annually. Realizing this potential demands a major policy shift. Beyond encouraging start-ups, Bhutan must build a full business development model. That means access to finance, incubation services, mentorship, digital tools, and protections against income volatility. Gender-responsive support, such as childcare, flexible credit, and training, is essential to ensure women do not drop out as businesses mature. At the same time, entrepreneurship cannot substitute for broader labor reforms. Strengthening school-to-work transitions, aligning education with industry, and stimulating private sector job creation are critical for creating an enabling environment.

Bhutan’s youthful population remains a powerful asset, but one at risk of underutilization. Without reforms, young people may continue cycling between poor-quality jobs, unrealistic aspirations, and fragile businesses, with many looking abroad for opportunities. With targeted, stage-specific, and gender-sensitive policies, however, youth entrepreneurship can become a pillar of inclusive growth and resilience, allowing Bhutan to fully realize the promise of its demographic transition.