The federal budget 20225-26 shows an unemployment figure at 6.3 per cent, particularly affecting the young persons aged 15-35 years. Youth joblessness is particularly alarming, with 44.9pc of jobseekers aged 15–24, and female unemployment far exceeding male.
Pakistan has a domestic labour force of 71.8 million, which is the sixth largest in the world. Each year, approximately 2m young Pakistanis join the labour market, contributing to an expanding talent pool. There is a serious mismatch between the jobs demanded and the supply of skills and trained manpower in the country. The various issues involved in youth unemployment include gender disparities, and lack of facilities and opportunities for skill development. There is no correlation between educational outcomes and labour market needs, both in rural and underserved regions. The situation is exacerbated by deep-rooted issues like limited access to quality education, insufficient job creation, and gender inequality in economic participation.
Pakistan has a population of 241.5m (Population Census 2023) with an annual growth rate of 2.55pc which may worsen the unemployment situation in the coming days. Pakistan’s population is characterised by a high proportion of youth. The latest labour force survey shows that the total youth population (15-29 years) is close to 62.58m. Over 40pc of the population falls in the age group 0-14 years, implying that the youth population will continue to swell further. The Pakistan Demographic (2020) report says that by 2030 out of a total estimated population of 280m, 100m will be youth. For lack of job opportunities at home, around 0.8m semi-skilled, skilled and highly skilled Pakistanis go abroad for employment annually.
According to a report by the Ministry of Planning, Pakistan’s unemployment rate surged to 7% from 1.5% over the past decade. The report attributes the rising unemployment to insufficient GDP growth and industrial stagnation. The report highlights the country’s inability to generate enough jobs, particularly for women and youth, and notes that unemployment is higher in Pakistan than in neighbouring countries.
Needless to emphasise, with an annual population increase of 5 million, the country faces mounting challenges in addressing poverty and unemployment. The Planning Commission estimates that Pakistan needs to create 1.5 million jobs annually to meet employment demands. To combat the growing crisis, the Planning Commission has recommended reducing youth unemployment by at least 6% and cutting women’s unemployment by 17%. The report underscores the urgency for economic reforms to address unemployment and inflation, emphasizing the need for robust strategies to boost job creation and stabilize prices in the country.
In the face of mounting employment, the government’s response remains inadequate. This neglect is deeply damaging to the country’s social fabric and long-term economic prospects. The new budget fails to propose any serious, targeted plan to tackle youth unemployment. The crisis is further exacerbated by persistent gender disparities in the labour market. Young women face a significantly higher unemployment rate—14.4% compared to 10% for young men. But the government’s budgetary priorities offer no meaningful remedies for correcting this imbalance.
Pakistan’s education system produces a workforce that is unprepared for the realities on the ground. Graduates with limited technical skills and no exposure to applied learning enter a job market that increasingly demands flexibility, digital fluency, and vocational competence. But the government’s budget fails to offer any comprehensive skills development strategy that could bridge this widening gap.
Another issue is the use of outdated data to shape policy. The Economic Survey depends on unemployment figures based on the 2020–21 Labour Force Survey—a dataset that is nearly four years old. To tackle mass unemployment it is wrong to make policy decisions based on obsolete figures. The fact that updated labour market data was not prioritized in time for the budget process highlights a complete lack of institutional coordination in combating unemployment.
It is important to note here that the budget does not contain any policy measures or long-term vision for employment generation. It does not include any plans for expanding technical and vocational education, nor does it introduce reforms for upgrading polytechnic institutes. Pakistan needs to invest in life skills education that aligns with real-world job needs. Polytechnic and vocational training institutes create a pool of workers equipped for employment in construction, IT, and other vital sectors. But the budget offers no fiscal incentives for establishing such institutions or partnerships with the private sector to make skills training a national priority.
Moreover, the government has ignored the vital role that the corporate sector could play in addressing youth unemployment. Structured apprenticeship and internship programs—if incentivised properly—can offer young people essential workplace experience while giving companies access to trained, motivated entry-level workers. Other countries have successfully implemented such models, but Pakistan’s budget makes no mention of this pathway.
Small and medium-sized enterprises (SMEs)—which form the backbone of Pakistan’s informal economy— can play a vital role in job creation. Small businesses are inherently labour-intensive and absorb a large portion of the unemployed workforce. But the budget has failed to provide any incentives to SMEs. There are no new credit facilities, no tax reforms for small businesses, and no concrete steps toward their integration into the formal financial system. Also, no measures have been proposed to invest in labour-intensive sectors such as agriculture, manufacturing, or construction. These industries hold the potential to generate mass employment at relatively low investment, especially for semi-skilled and unskilled workers. Similarly, the rapidly growing digital economy, no special funds, incubation platforms, or tax incentives have been proposed in the budget.