Between 2001 and 2019, Bhutan made significant economic progress with an average annual growth rate of 7 percent. This progress was accompanied by significant improvements in monetary and nonmonetary standards of living. However, recent shocks from the COVID-19 pandemic and global macroeconomic volatilities disrupted these efforts. The recovery could be further complicated by the country's pressing structural challenges related to a lack of economic diversification away from the hydropower-led growth model, vulnerabilities to shocks, and weak productivity gains. In addition, human capital remains low. The record number of Bhutanese migrating abroad with the reopening of the country's borders in mid-2022 is fueling further concerns by policy makers about the country's development prospects. This report examines the labor market in Bhutan with the objective of identifying the most pressing challenges at the pandemic recovery stage and ways to mitigate them. It is hoped that the findings can be used to support the Royal Government of Bhutan (RGoB) in its implementation of its thirteenth Five-Year Plan (2024-2029).