Arya News - Bhutan has only five years to maximise the economic benefits of its working-age population before it peaks in 2031, and the country is projected to become an aged society by 2048, according to a new World Bank report.
THIMPHU – Bhutan has only five years to maximise the economic benefits of its working-age population before it peaks in 2031, and the country is projected to become an aged society by 2048, according to a new World Bank report.
The report, “Demographic Change in South Asia: From Tailwinds to Headwinds for Development”, projects that the working-age population, those aged 15 to 64, will peak in 2031. After that, its share of the total population is expected to decline.
Bhutan is projected to enter the ageing phase in 2028, when people aged 65 and above will make up at least 7 percent of the population. By 2048, that share is expected to reach 14 percent, the threshold at which a population is classified as aged.
The transition from an ageing to an aged society will therefore take just 20 years, putting growing pressure on healthcare services, pension systems, and social protection.
The report says South Asian countries are approaching a demographic turning point, with a narrowing window to benefit from a growing working-age population while preparing for a fast-growing elderly one.
For Bhutan, the next five years are a critical opportunity to strengthen its workforce, improve productivity and create jobs before its demographic advantage diminish.
Its priorities for countries nearing their peak include job creation, skills development, better health outcomes and more women in the workforce. It also calls for stronger pension systems and wider financial security for older people, particularly those in the informal sector who may not have adequate retirement savings.
Jobs concentrated in government
Bhutan’s employment structure poses another challenge. Regular salaried employees make up 34 percent of the workforce. Of these, about 75 percent work in government-related jobs and only 16 percent work in private businesses.
The report adds that Bhutan’s informality rate may be slightly understated because the household survey does not directly ask whether workers have written employment contracts or contribute to social security schemes. Informal jobs often come without pensions, paid sick leave or health insurance.
Financial inclusion is also a concern. Only 34 percent of Bhutanese adults hold an account at a financial institution, according to the World Bank’s Global Findex Database 2025. This highlights the need to improve access to financial services and encourage long-term savings.
Large firms dominate, women face barriers
The report points to employment concentration in a few large firms. Large firms account for only 0.3 percent of all firms but employ 32 percent of workers, which suggests limited dynamism in the wider business sector.
High-productivity firms in Bhutan have created jobs faster than 75 percent of firms in other emerging market and developing economies, but this dynamism has yet to spread across the economy.
Women face significant barriers to employment. One in three women aged 15 to 24 is not in employment, education or training, largely because of family responsibilities. The report recommends better childcare, safe transportation, flexible working arrangements, and stronger support for women-owned businesses.
It also states gaps in human capital. Bhutan spends the most on education per student in the region, yet its students’ test scores do not exceed those of countries spending considerably less.
The window is narrowing
“Bhutan has made impressive investments in its people,” said Xavier Furtado, World Bank Group Country Manager for Bhutan. “The priority now is to make sure those investments translate into market-relevant skills and more and better jobs, particularly for young women and youth.”
He said Bhutan could still benefit from its youth dividend, but the window was narrowing. “The choices Bhutan makes now on jobs, skills, and productive social protection will determine whether demographic change becomes a source of lasting prosperity,” he said.
The World Bank Group Regional Director for People Vertical, Cem Mete, said youth outmigration, particularly to Australia, was an important dynamic concerning Bhutanese policymakers.
He said the World Bank was working with the government to understand who was leaving the country, why, and what incentives were driving migration, and was also examining conditions in the countries receiving Bhutanese migrants.
As the population ages, demand for healthcare, long-term care and retirement income is expected to rise. The report recommends strengthening primary healthcare, developing elderly care systems and creating more opportunities for older people to stay economically productive.
South Asia ageing faster
Regionally, a growing share of adults in their prime working years has added 0.4 percent a year to South Asia’s GDP and 1.1 percent to labour productivity since 2000.
The region has begun to age, however, and is projected to move from an ageing to an aged population in 25 years, against 32 years for the average developing economy. The annual contribution of demographic change to regional GDP growth is projected to fall to 0.1 percent by 2050.
“South Asian economies are ageing faster and earlier in their development journeys,” said Johannes Zutt, World Bank Vice President for South Asia. “They need to act now to adopt policies and build infrastructure that create more and better jobs and deepen the gains from their youth dividend, while at the same time preparing for ageing,” he said.
This would allow South Asia to make the most of its large working-age population and lay the foundations for a “second dividend” as healthier older people continue contributing to the economy.
The region also faces a jobs gap. Only 60 percent of South Asia’s working-age population is employed, and 88 percent of employed workers hold informal jobs.
Pension coverage is limited, with 17 percent of the working-age population contributing to a pension scheme and just 10 percent of older South Asians receiving pension benefits, the lowest coverage globally.
The report says decisions made over the next decade will determine whether South Asian countries turn demographic change into sustained growth or face rising economic and social pressures as their populations age.