Pakistan’s middle-income aspiration: from economic mobility to survival

The middle-class contract in decline

A university degree, a professional career, a modest home, a family car, quality schooling, and predictable savings: these have long defined the aspirations of Pakistan’s middle class. For generations, higher education and hard work served as reliable routes to upward economic mobility. Yet, for an increasing number of households, maintaining even this baseline standard of living has become difficult. Salaries struggle to keep pace with rising prices, emergency savings are routinely consumed by monthly utility bills, and professional qualifications no longer guarantee economic advancement. The aspiration to sustain a middle-income position remains resilient, but the economic foundations required to support it are weakening.

The middle class occupies a foundational position in national stability. It stimulates domestic markets, funds human capital development through private educational expenditure, generates formal savings, and acts as a buffer against social volatility. Its strength is measured not merely by nominal earnings, but by the financial predictability that allows families to plan for the future.

Economic mobility, however, requires a macroeconomic environment capable of generating productive employment, rewarding specialised skills and fostering investment opportunities. When household purchasing power erodes, these gains become increasingly difficult to sustain.

The inflationary squeeze and wealth gap

The financial pressure on salaried households is underscored by official economic indicators. According to the Pakistan Bureau of Statistics’ Household Integrated Economic Survey 2024–25, average monthly household income grew from Rs41,545 in 2018–19 to Rs82,179 in 2024–25. While this nominal doubling appears positive on the surface, an inflation-adjusted analysis by Gallup Pakistan reveals that real household purchasing power contracted by 10 per cent nationally over the same period. Higher rupee incomes have therefore failed to protect living standards against inflation.

This squeeze is especially severe for fixed-salary earners. Unlike asset-owning groups whose property or business holdings may appreciate alongside inflation, salaried professionals rely primarily on monthly remuneration. Their incomes may rise in nominal terms, but essential expenditures—including housing, electricity, fuel, healthcare, and food—can increase significantly faster.

The World Bank’s Poverty and Equity Brief highlights this vulnerability, noting that poor, vulnerable and aspiring middle-class households allocate between 42 and 48 percent of their budgets to food, and another 23 to 28 percent to housing, energy and transport. This leaves limited room for emergency savings or capital accumulation.

A widening economic divide

The pressure on the middle class must also be understood in the context of unequal economic opportunity, which reinforces the distinction between income and wealth. A household may earn enough to fall within a middle-income bracket yet remain financially precarious without liquid savings or physical assets to absorb economic shocks.

The World Bank reports that Pakistan’s national poverty rate rose from 22 percent in 2018–19 to 29 percent in 2024–25, with worsening consumption distribution contributing to the increase.

These figures do not establish the precise size of the middle class, but they indicate wider pressures on household welfare. Moving from economic vulnerability towards middle-income stability is becoming increasingly difficult.

The economic cost of a weakening middle class

A financially secure middle class contributes to economic dynamism. It supports demand for goods and services, creates markets for businesses, invests in education, saves for the future and provides a pool of skilled workers and entrepreneurs.

When households lose purchasing power, domestic demand becomes constrained. Families postpone major purchases, reduce discretionary spending, defer education or healthcare expenditure and draw down savings to meet routine expenses. Small businesses and service providers consequently face weaker demand, while investment in productive assets becomes more difficult.

The State Bank of Pakistan’s Annual Report 2024–25 identifies high inflation, informality, youth dependency and limited financial development as factors that constrain formal savings. Its analysis also finds that household savings are positively related to income and education, and negatively related to dependency ratios. Savings are not merely a household safety net; they are also a potential source of investment and long-term economic growth.

A weakening middle-income base also affects social mobility. If families cannot afford quality education, professional training, healthcare or housing, the next generation may find it increasingly difficult to improve upon the economic position of the previous one. The promise that education and hard work can lead to a better life becomes less credible.

Educated youth: qualifications without corresponding opportunities

Nowhere is this structural disconnect more visible than among Pakistan’s educated youth. Families routinely exhaust lifetime savings to secure higher education for their children, expecting academic credentials to unlock financial independence. However, the domestic economy continues to struggle to generate productive opportunities commensurate with these qualifications. The challenge extends beyond unemployment to include underemployment, wage stagnation and skills mismatches. Graduates regularly accept positions below their training levels or remain financially dependent on their parents long after graduation.

The Pakistan Economic Survey 2024–25 recorded that 727,381 workers registered for overseas employment in 2024. This outflow included doctors, engineers, IT professionals and executives alongside other skilled workers. While overseas employment generates valuable remittances, the scale of outward migration raises questions about the domestic economy’s ability to retain and productively employ its human capital. The core policy concern is not migration itself, but whether Pakistan can offer its skilled citizens a meaningful choice between building a life at home and pursuing opportunities abroad.

Restoring the engine of economic mobility

Strengthening the middle class requires moving beyond short-term subsidies towards a comprehensive development model. Pakistan must prioritise productive industrialisation by expanding export-oriented enterprises and high-value service sectors capable of absorbing skilled graduates. Policymakers must also restore predictability through stable tax regimes, manageable energy tariffs and consistent monetary policy, reducing uncertainty for businesses and households alike.

Reinvestment in accessible public healthcare, public transport and affordable housing can alleviate household expenditure burdens, while modernising higher education curricula will better align skills with domestic market demands and international standards.

Pakistan’s middle-income aspiration is ultimately an aspiration for security, dignity, and opportunity. A nation cannot sustain long-term economic growth if the rewards of education and professional effort become detached from financial security. Nor can a dynamic domestic economy emerge if a substantial segment of its working population is continually struggling to preserve its existing standard of living.

The middle class should not be viewed merely as a recipient of economic relief, but as a driving force of economic progress. What it needs is an enabling policy environment in which hard work, education, enterprise, and ambition can translate into economic security and upward mobility.

Moving forward, national economic policy must expand its focus beyond poverty alleviation to rebuild the structural conditions that enable working citizens to advance, remain secure and build a prosperous future for the next generation. That remains the ultimate benchmark of sustainable economic reform.

Copyright Business Recorder, 2026