According to noted economist Dr Hafiz A Pasha, unemployment in the country now is as high as 22 percent. This figure is 30 percent for males and 17-18 percent for females. This calculation is based on the first-ever digitally-held seventh Population and Housing Census 2023. Among the many pieces of evidence of the worsening unemployment situation is the increasing crime rate in the country in recent months.
Experts cite many factors to explain the phenomenon, the most important being the stagnant state of the economy. Pakistan has experienced low GDP growth for the past three years, which is attributable to the tight monetary and fiscal policy conditions dictated by the International Monetary Fund.
The story is best told through statistics. In 2022-23, growth was negative 0.2 percent followed by 2.5 percent in 2023-24 and 2.8 percent in 2024-25. Revenue collection declined from 12.6 percent of GDP in 2023-24 to 11.7 percent in 2024-25, while the large-scale manufacturing sector registered negative 1.52 percent July-April 2025 against 0.26 percent in the comparable period in the previous year. This rate of economic growth, much lower than the regional average, is hardly sufficient to generate the required number of jobs for the rising generations of youth.
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 economic exclusion of young people is contributing to growing social unrest and is widely believed to be a factor in rising crime rates across 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.
A concurrent development is the rise in poverty levels – up to 44.2 percent as reported by the World Bank. This means nearly half of the population now lives below the poverty line, struggling with access to food, shelter, healthcare, and education. While the government boastfully cites the decline in inflation and a rise in foreign exchange reserves, they have little to do with productivity or employment growth.
One reason for rising unemployment and economic difficulties is heavy and excessive taxation being resorted to by the government. Indirect taxes like sales tax, petroleum levies, and withholding tax negatively impact the poor and lower-income groups. Despite repeated claims by government officials to broaden the tax base, no follow-up action has been taken and the rich and super rich and untaxed sectors remain outside the tax net.
This heavy dependence on indirect taxes has had severe consequences on household purchasing power. The current economic framework, which prioritises deficit control and foreign loan accumulation over human development is faulty because it focuses less on human development and more on headline figures such as inflation control and reserve accumulation. This approach fails to address the seminal issues of joblessness, inequality, and economic stagnation. Without a shift in focus towards inclusive and employment-generating policies, the economy will continue to stagnate and decline. It is time we developed a more inclusive strategy with more focus on job creation and poverty reduction, investments in youth skills, vocational training, and digital literacy to empower the youth.
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 versatility, flexibility, digital fluency, and vocational competence. But the government has not yet developed any comprehensive skills development strategy that could bridge this widening gap.
Simultaneously, efforts should be made to promote small and medium enterprises, and other job-intensive industries to solve the unemployment crisis on a long-term basis. 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. There is a need 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. Without thoroughgoing structural reforms, the unemployment situation will worsen in the coming days creating social unrest and political tension in the country.