- Addressing unemployment requires a strategy that promotes industrial growth, exports, investment, education and skill development
According to the International Labour Organization (ILO)’s latest report on employment prospects for this year, the global unemployment rate is projected to remain at a historically low level of 4.9 per cent in 2026, while the total number of unemployed people is expected to reach 186 million. Around 284 million workers worldwide continue to live in extreme poverty—on less than $3 a day — and more than two billion workers remain engaged in informal employment.
Looking beyond unemployment figures, the broader global jobs gap—capturing individuals who want paid work but cannot access it — highlights a far larger level of unmet labour demand than is reflected by unemployment alone. At the same time, improvements in job quality have slowed sharply. Approximately 300 million workers continue to live in extreme working poverty, while 2.1 billion workers remain in informal employment, often without access to basic rights, social protection, or income security. Real wage and labour income growth have yet to fully recover from recent inflationary shocks, limiting gains in living standards.
In developing countries such as Pakistan, the newly released Labour Force Survey has revealed that the unemployment rate rose to its highest level in 21 years, reaching 7.1 per cent in the last fiscal year. The government unveiled the survey findings, which showed that unemployment was highest in Khyber Pakhtunkhwa (K-P), followed by Punjab, while Sindh recorded the lowest unemployment rate. The data showed that unemployment, which stood at 6.3 per cent in 2021, increased to 7.1 per cent during FY2025.
Official statistics confirmed that the 7.1 per cent unemployment rate was the highest since FY2004, when it was recorded at 7.7 per cent. Since then, unemployment has largely remained within the range of 5.3 per cent to 6.9 per cent. In FY2019, the unemployment rate stood at 6.9 per cent. Analysts attribute the recent rise to climate-related disasters and the IMF’s stabilisation programme, which constrained economic growth. The global price cycle is also believed to have negatively affected employment conditions.
The present government entered into a three-year, $7 billion IMF programme in September last year, agreeing to implement nearly 50 conditions. Out of the estimated 180 million working-age population, official statistics showed that nearly 118 million people—roughly two out of every three—were unpaid workers, primarily engaged in household services such as cleaning, fetching water, childcare, and raising livestock or poultry. Nearly one-fourth of unpaid workers were involved in household jobs, 18.7 per cent in livestock activities, 23 per cent in childcare, 7 per cent in fetching water for household use, and 7.1 per cent in raising chickens at home.
The survey further revealed that out of the total 5.9 million unemployed individuals, 4.6 million — or 77.5 per cent — were literate. Nearly one million unemployed individuals held formal educational degrees. The highest number of unemployed people belonged to the 15–29 age group, followed by those aged 15–24 years. Regionally, the highest unemployment rate of 9.6 per cent was recorded in K-P, followed by 7.3 per cent in Punjab, 5.5 per cent in Balochistan, and 5.3 per cent in Sindh.
Pakistan’s average economic growth has remained below 3 per cent for an extended period, limiting the economy’s ability to generate sufficient employment opportunities to absorb new labour market entrants. Each year, approximately 3.5 million individuals enter the job market. The Planning Minister noted that employment patterns are gradually shifting from agriculture towards services, resulting in a decline in agriculture’s share of total employment during the last fiscal year.
According to the survey, the increase in job seekers outpaced the number of employment opportunities created by the economy. The agriculture sector’s share in total employment declined by four per cent to 33.1 per cent. The manufacturing sector’s share also fell marginally to 14.4 per cent, reflecting the challenges faced by industries due to double-digit interest rates, high energy costs, and heavy taxation. Meanwhile, wholesale and retail trade accounted for 16 per cent of total employment.
The labour force participation rate — defined as the employed and unemployed population as a percentage of those aged 10 years and above — increased from 44.9 per cent to 46.3 per cent. Survey results showed that the labour force expanded from 71.8 million in FY2020–21 to 83.1 million in FY2024–25, indicating an annual addition of around 3.5 million workers. Employees made up the largest segment at 43.5 per cent, followed by own-account workers at 36.1 per cent, contributing family workers at 19.1 per cent, and employers at 1.3 per cent.
Furthermore, the informal sector accounted for more than 72 per cent of non-agricultural employment, with a higher concentration in rural areas compared to urban centres. At the national level, the average monthly wage of paid employees rose significantly between FY2021 and FY2025, increasing from Rs24,028 to Rs39,042. The average monthly wage for males increased from Rs24,643 to Rs39,302, while female wages rose from Rs20,117 to Rs37,347.
Addressing unemployment in Pakistan requires a comprehensive strategy that promotes industrial growth, exports, and investment. Improving education and skill development is essential to ensuring a capable workforce, while supporting small and medium enterprises can foster entrepreneurship and job creation. Enhancing infrastructure and attracting foreign direct investment can stimulate economic activity and generate employment opportunities. Additionally, modernising agriculture, promoting technological innovation, and strengthening social safety nets are vital to supporting vulnerable populations. Effective policy reforms and transparent governance remain crucial to creating a stable environment for sustainable economic growth and long-term employment generation.