According to the latest Labour Force Survey released last week by the Pakistan Bureau of Statistics, the unemployment rate in Pakistan has reached a 21-year peak of 7.1 percent.

The survey reveals that during the last four years, the number of unemployed Pakistanis has jumped by 31 percent rising from 4.5 million to 5.9 million in 2024-25, denoting a jump of around 1.4 million people. Unemployment has affected all age groups, especially the youth aged 15-24 years in whose case joblessness went up from 11.1pc in 2020-21 to 12.6pc in 2024-25. Among the group aged 15-29, the rate rose to 11.5pc from 10.3pc, reflecting a shrinking job market.

Overall, the average unemployment rate increased to 6.9pc, compared to 6.3pc in the previous labour force survey. Regarding the gender factor, the male unemployment rate inched up from 5.5pc to 5.9pc, while for females it increased from 8.9pc to 9.7pc. In rural areas, unemployment rose from 5.8pc to 6.3pc, and in urban areas, it edged up from 7.3pc to 8pc. According to the survey, there was a rise in the Labour Force Participation Rate, indicating greater engagement of the working-age population in economic activities. While the rural participation rose from 48.6pc to 52.3pc, for the urban area, it went up from 38.8pc to 40.8pc, reflecting broader workforce inclusion across the country.

The total labour force in the country increased from 71.8m in 2020-21 to 85.6m in 2024-25 –- an addition of 3.5m people per year. The proportion of people aged 10 and above, who are either employed or seeking employment, increased from 44.9pc in 2020-21 to 47.7pc in 2024-25. As per the trend noted in recent years, the share of agricultural employment declined from 37.4pc in 2020-21 to 33.1pc in 2024-25, while the services sector grew from 37.2pc to 41.2pc. But unfortunately, industry’s share declined to 24.9pc from 25.4pc.

Out of 179.6m working-age individuals in 2024-25, 117.4m are engaged in unpaid domestic and care activities. Out of 92m men, 50.7m (55pc) perform unpaid work, while among 87.6m women, 66.7m (76pc) are engaged in unpaid domestic and care responsibilities. Employees constitute the largest group (43.5pc), followed by own-account workers (36.1pc), contributing family workers (19.1pc), and employers (1.3pc). Between the two surveys, the share of employees rose from 42pc to 43.5pc, and own-account workers from 35.5pc to 36.1pc, while contributing family workers declined from 21.1pc to 19.1pc. In non-agricultural work, the informal sector continues to dominate, accounting for 72.1pc of jobs — 75.5pc in rural areas and 68.3pc in urban areas. Formal sector work is more common in cities, reaching 31.7pc. Female participation is higher in the formal sector at 33.7pc, while male participation in the informal sector reaches 73pc. Formal work has grown slightly over time.

The latest Labour Force Survey identifies some of  the factors underlying the deteriorating job situation in the country. The first is the education and skills gap due to which many positions in the formal sector, especially in industries, remain unfilled for lack of suitable candidates. Secondly, the survey findings reflect an economy which is not in good health.

It is no secret that during the last four years the country’s economic growth has suffered badly from a decline in foreign direct investment and exodus of multinational companies from Pakistan. The local investors have also shied away from new ventures due to high energy costs and bank interest charges. The government’s policy lacks consistency and reliability which discourages both foreign and local investors. The economy is in a moribund state due to the acts of omission and commission by successive governments. The taxation system suffers from deep-rooted structural deficiencies which have rendered running of industries less and less profitable with the passage of time. Business circles say that complaints against over-taxation and corruption fall on deaf ears. Instead, the authorities concerned come up with new schemes which raise the cost of doing business. The rules regulating economic activities are too cumbersome and complex which hampers smooth working of businesses.

Rising unemployment is a ticking time bomb which must be defused before it explodes and causes social unrest and chaos. To this end effective strategies should be adopted to accelerate the pace of economic growth, with special focus on industries which are labour intensive. It is equally important to create a conducive economic, political and security environment for existing businesses to flourish as well as to attract foreign investors. Simultaneously, steps should be taken to expand the network of technical and vocational  institutes in the country in order to train our youth and equip them with the skills needed by the industrial and corporate sectors. In this regard, the government should put special focus on the SME sector which has unlimited potential for job creation.