Pakistan is grappling with significant economic challenges, as the International Monetary Fund (IMF) projects modest growth while inflation soars to unprecedented levels. These economic pressures are exacerbating the unemployment crisis, particularly among the youth, who are already facing limited job opportunities. With the closure of key industries like Faisalabad’s textile sector, thousands of workers are being thrust into unemployment, adding to the woes of a population already burdened by rising costs and stagnant wages.

Pakistan’s untapped potential is vast, yet successive administrations have squandered many of the nation’s natural comparative advantages. Among these overlooked assets is the fact that Pakistan, with 40 percent of its population under the age of 40 and 64 percent under 30, stands as the youngest nation globally in terms of youth population.

The United Nations highlights this as a potential demographic dividend, particularly as much of the world faces aging populations while Pakistan grows younger. A larger percentage of our population, therefore, has the capacity to drive nation-building more than most other countries. However, Pakistan’s status as the fifth most populous country on the planet brings its own challenges. The youth bulge consists of millions in need of jobs and a robust economy to sustain them year after year. Pakistan is also one of the poorest and least educated countries, which means our youth are more often exposed to poverty, disenfranchisement, and growing desperation rather than education and employment opportunities.

To harness this demographic potential, the economy must generate approximately one million new jobs annually, requiring a consistent growth rate of 6 percent. Failure to achieve this will see the demographic dividend transform into a demographic disaster, exacerbating poverty and crime.

Given that economic growth has averaged only 3.6 percent over the past decade (FY2015-24), and is unlikely to reach 6 percent anytime soon, what should have been a natural advantage for Pakistan has already become a ticking time bomb. If the recent years of inflation and unemployment have seemed dire for the youth, the future may be even more challenging. The stringent “upfront conditions” imposed by the IMF bailout program are likely to take a significant toll on the youth, particularly those in middle- and lower-income households. With each tranche, taxes and tariffs will tighten, further squeezing an already burdened population.

Pakistan’s current predicament is yet another self-inflicted wound, a consequence of neglecting local demographics—a pitfall that other nations with foresight managed to avoid. Take India, for instance, which is also home to a vast youth population. Despite grappling with widespread poverty, India has successfully fostered a dynamic job market for its youth, propelling its economy to become the fifth largest in the world. In contrast, Pakistan struggles to find lenders merely to stave off default.

Our situation has deteriorated so much that addressing the issue will require a long and arduous journey, beginning with the provision of basic education and vocational training for students and young professionals. However, such initiatives demand substantial funding—resources that the state can no longer afford to squander. This is despite the government’s ongoing indulgence in perks, privileges, and luxury accommodations for parliamentarians. Just as our economic collapse and looming threat of sovereign default are the products of continuous policy blunders by successive governments, so too is the plight of Pakistan’s disillusioned and neglected youth. It is our leaders who have steered us toward a directionless, bankrupt, and effectively insolvent economy.

Yet, our leaders continue to overlook the mounting frustrations of the youth at their own peril. This ticking time bomb, if not defused, is bound to explode with catastrophic consequences. We need only glance at neighboring countries to witness real-world examples of the devastation that such neglect can bring.

The International Monetary Fund (IMF) maintained its forecast for Pakistan’s economic growth at 2% for the current fiscal year but raised its inflation projection to nearly 25%. According to the IMF’s latest report, inflation is expected to persist at around 24.8% this fiscal year, an increase of approximately 1% from its previous forecast just four months ago.

The Economic Survey 2023-24 reveals that Pakistan’s unemployment rate currently stands at 6.3%, with 4.51 million people out of work. The latest available Labour Force Survey (LFS) for 2020-21 indicates that the total labor force in the country is 71.76 million, with 48.5 million in rural areas and 23.2 million in urban regions. Of this, 67.25 million individuals are employed, with 45.7 million in rural areas and 21.5 million in urban centers.

Meanwhile, the International Human Rights Observer (IHRO) has voiced deep concern over the ongoing crisis in Faisalabad’s textile industry, which has led to the closure of over a hundred factories, including the prominent Sitara Textile Mills. This dire situation has resulted in significant job losses, with nearly 900 workers from Sitara Textile alone suddenly finding themselves unemployed. The wider impact on the region is even more alarming, as an estimated 150,000 to 200,000 workers have been left without jobs due to the industry’s downturn.

As Pakistan navigates through these turbulent economic times, the youth stand at the crossroads of hope and despair. The high inflation rate and rising unemployment are creating a perfect storm that threatens to derail the future of an entire generation. Addressing these issues requires urgent and comprehensive economic reforms, targeted job creation, and a focus on sustainable growth to ensure that the country’s youth are not left behind in this crisis. Without decisive action, the economic challenges of today could have long-lasting consequences for Pakistan’s future.