Pakistan is facing the challenge of creating around 30 million jobs in the next ten years to accommodate new entrants into the labor market. However, recent economic growth has been insufficient to meet this demand, leading to brain drain and decreased productivity, as per a report by Maldives Insight.
The report reveals that Pakistan’s economy grew at an average rate of 1.7% annually from 2022 to 2025, significantly below the required level to sustain employment. This slow growth has resulted in an official unemployment rate of 7.1% in FY25, the highest in 21 years.
According to the report, the sluggish pace of economic growth in Pakistan has been accompanied by high and persistent inflation, which has eroded purchasing power and reduced real household incomes. Data from the Population and Housing Census 2023 suggests that the actual unemployment rate could be as high as 22%.
The report emphasizes that the current levels of unemployment are not just a future concern but a present obstacle to growth. It hampers consumption, diminishes human capital, and accelerates the outward migration of skilled professionals, including engineers, doctors, and IT specialists.
The report also points out various factors contributing to Pakistan’s employment crisis, such as low investment rates, energy shortages, policy uncertainty, and repeated cycles of macroeconomic stabilization. These issues have hindered industrial expansion and discouraged long-term hiring, particularly in sectors like agriculture, manufacturing, construction, and trade.
Highlighting the impact of declining real incomes, the report notes that cumulative inflation has consistently outpaced wage growth in recent years, leading to a decline in real per capita household income. This has further exacerbated the employment challenges in the country.
As a consequence of rising unemployment, even professionals in fields like engineering, medicine, and IT are increasingly seeking opportunities abroad. This trend not only drains human capital but also diminishes productivity and innovation within the economy.
The report underscores that the economy’s inability to convert output into significant employment opportunities has weakened sectors like wholesale and retail trade. Consumer demand has faltered, resulting in intermittent economic growth that fails to generate substantial employment opportunities.
