April 6, 2026
THIMPHU – Even as Bhutan’s widening economic divide is frequently debated, a persistent policy deadlock over salaries and labour protections is pushing low-income workers into an increasingly untenable reality—trapped between stagnant earnings and a rapidly rising cost of living.
For thousands employed in low-paying sectors, from hospitality and retail to manual labour and support services, the promise of economic mobility has given way to a daily struggle for survival. In Thimphu, many workers report that monthly salary is consumed by rent alone, leaving little for basic need, let alone savings.
This growing disparity is not simply the result of individual circumstances but deeper structural constraints—a combination of policy inertia and market forces—despite constitutional commitments to reduce inequality and prevent excessive concentration of wealth.
With rents increasing faster than headline inflation, which reached 5.61 percent in February this year, those on the margins are trapped in a cycle of stagnation, often facing a difficult choice between coping with rising costs or leaving the country.
A security guard at a corporate office takes home just Nu 9,000 a month after deductions, barely enough to support his family. Many like him, he said, rely on salary advances, trapping them in the vicious of cycle of debt that is increasingly difficult to escape.
“I thought of quitting, but I have loans to repay,” he said, adding that better opportunities abroad remain out of reach for those without qualifications.
“Those with higher educational qualifications have the option to live and work abroad, but we are stuck in a cycle of stagnation,” he said. “The rising cost of living is forcing people like us to live in temporary structures and low-quality housing.”
A sales girl, who works 12 hours a day with only one day off each week, earns Nu 10,000 a month. “I am underpaid, overworked, and trapped in poor working conditions, which cause emotional and physical stress,” she said.
She added such conditions can leave women particularly vulnerable, sometimes forcing them to seek financial support elsewhere.
Labour market data highlight the scale of the challenge. According to the 2025–2026 labour market report, class XII graduates account for the largest group of jobseekers, with 4,569 out of 12,871 registered in a single year, while many others enter the workforce with lower qualification or no formal education.
Yet sectors employing large numbers of low-income workers invest little in retention or skills development, limiting upward mobility. Many of them work in low-recognition roles, often in hazardous conditions, with limited career prospects.
The labour market report shows that women are disproportionately represented in low-paying sectors such as arts, accommodation, and food services, where they make up about 61 percent of workers, while men dominate higher-paying sectors like energy and construction, where wages are often double.
Low wages, rising living costs and limited career pathways are fuelling financial insecurity among young people, leaving many unable to achieve independence well into adulthood.
“For many young people, building a stable livelihood, supporting family formation, and achieving financial security remain challenging without a clear path to advancement and economic security by their mid to late 20s,” said a former government driver.
Policy gaps
Critics argue that policy support has failed to keep pace with the realities facing low-income workers. While numerous reports have highlighted inequality, concrete action has been limited, fuelling frustration among those at the lower end of the income spectrum.
“We also want to live a decent life like anyone else, but it remains a dream,” said a government employee at entry level. “There is no policy to support us. Look at Changjiji housing complex, for example. It is meant for low-income people, but even those in higher positions are occupying the houses.”
More broadly, salary growth in the private sector has lagged behind rising living costs.
Although salaries of private sector employees depend on firm profitability, which is influenced by several factors, many say there is a need to protect the interest of the working population, particularly those in lower-income brackets.
For instance, while landlords are legally permitted to increase rents by up to 10 percent every two years, there is no equivalent requirement for employers to provide annual salary adjustments. In practice, pay increases remain discretionary.
Bhutan’s national minimum wage — Nu 215 per day, or Nu 6,450 per month — is among the lowest in Asia when adjusted for purchasing power.
The Labour and Employment Act of Bhutan 2007 requires written employment contracts and timely payment of wages, while company rules may set performance-based increments. It also mandates overtime pay at 1.5 times the normal rate and a 50 percent premium for night work.
Section 176 allows workers in enterprises with 12 or more employees, employed under a contract, to form a workers’ association to represent their interests and negotiate wages in good faith. However, this right does not apply to informal or very small workplaces where such formal representation is not established.
Some countries have mandated salary increases. For example, Oman requires annual performance-based increments, while Belgium, Luxembourg, and Malta use automatic wage indexation. Egypt mandates a minimum annual increase, while France requires annual wage negotiations and inflation-based adjustments.
In Singapore and the United Kingdom, salary increases are generally limited to minimum wage adjustments or specific sectors. In countries like Denmark, Sweden, and Norway, increments are effectively ensured through strong collective bargaining agreements.
Pay structure disparities
Recent public sector pay reforms have further complicated the landscape. Introduced in 2022–2023 to stem rising resignations and outmigration, the government’s pay revisions narrowed disparities at senior levels but widened gaps particularly between public and private sector employees.
The pay reforms narrowed gaps between Druk Holding and Investments (DHI) and the civil service at the top but widened disparities with the private sector and lower tiers. DHI offers stronger entry-level pay, while the civil service and state-owned enterprises (SOEs) are at par, which creates a fragmented pay structure.
At the top level, chief executive officers of DHI companies earn a fixed gross monthly salary of about Nu 166,500, excluding performance bonuses. This is higher than State-owned enterprise chief executive officers, who earn about Nu 138,000, and civil service roles such as Cabinet Secretaries, who earn around Nu 130,480.
A DHI employee at the middle level has a more structured pay scale compared to SOEs and the civil service. For example, a fresh graduate in Grade 8 at DHI and its companies earns a gross monthly salary of Nu 46,908, which is Nu 6,308 higher than the gross monthly salary of Nu 40,600 for a civil servant at the same level. However, employees in SOEs at the same grade receive Nu 37,751 per month, which is lower by Nu 9,157.
The civil service offers relatively higher pay floors, with entry-level support staff earning between Nu 21,000 and Nu 24,000 per month, compared to lower SOE entry-level roles starting from Nu 20,148 and DHI roles at around Nu 16,443.
Outside the public system, salaries remain markedly lower. Jobs in services and manual labour, including kitchen helpers, sales assistants, labourers, and security guards, often pay between Nu 8,000 and Nu 12,000 a month, far below public sector entry-level wages.
Entry-level and service jobs pay around Nu 10,000 to Nu 15,000 a month, while skilled roles offer Nu 18,000 to Nu 35,000 a month. Public sector contract jobs range from Nu 10,500 to Nu 17,700, depending on qualifications and position.
Private sector employees say the widening gap has left them increasingly disadvantaged. While some managers command competitive salaries, lower-tier workers across sectors remain underpaid, with limited prospects for advancement.
The government’s Youth Engagement and Livelihood Programme supports private firms by providing salary subsidies of Nu 9,000 for university graduates, Nu 8,000 for diploma holders, Nu 7,000 for Class XII or certificate holders, and Nu 6,000 for Class X and below, with additional employer contributions ranging from Nu 4,500 to Nu 6,000.
However, analysts say such measures fall short of addressing deeper structural issues in wage-setting and labour protections.
For Bhutanese, getting a job at an international organisation is considered an achievement for professional growth and exposure. While salary details are not publicly disclosed, an entry-level National Professional Officer staff member at the United Nations office in Bhutan earns about Nu 100,813 (USD 1,064) per month.
Inequality persists despite gains
Bhutan’s income inequality remains high, with a Gini index of 28.5 in 2022, although it improved from 37.4 in 2017. Income gaps continue due to differences in public and private sector wages, urban and rural incomes, and access to opportunities, although Bhutan is more equal than many other developing countries.
The World Bank’s Bhutan Poverty and Equity Assessment 2024 shows wide income disparities and uneven progress, with rural poverty, persistent inequality, and regional gaps, despite the national poverty rate falling from 28 percent to 11.6 percent between 2017 and 2022.
According to the World Economic Outlook 2025, Bhutan, part of the Asia-Pacific region alongside China, India, and Japan, remains a small developing economy facing challenges of inequality, limited private sector growth, and employment opportunities, while global growth is driven by large and emerging markets.
Stock exchange data show returns to capital have consistently outpaced returns to growth, peaking at a six-fold gap in 2017, signalling rising wealth inequality, though 2024–2025 indicators suggest a stabilising but still high level of inequality.
Three years ago, during the winter session of Parliament in 2022, His Majesty the King spoke of a private-sector employee, Karma Dechen, the struggle of a 28-year-old mother in Thimphu earning Nu 12,500 a month. This story reflected the wider economic hardships and challenges faced by ordinary Bhutanese, and deeply moved the nation.
Today, those challenges still remain.