Last week’s release of the Pakistan Labour Force Survey (LFS) 2024–25 should be treated as more than a statistical update. It is a national warning.
The dream of becoming a USD 3 trillion economy—often echoed in speeches and policy documents—rests on one core foundation: our labour force. Yet the latest data confirms what many economists have feared for years: Pakistan’s workforce is structurally unprepared for economic takeoff.
The numbers paint a sobering picture. Labour force participation has increased marginally—47.7 percent overall—but the rise hides deep fractures. Female participation is still just 24.4 percent, one of the lowest in the region, despite women being 49 percent of the population.
The formal sector remains a minority employer—only 27.9 percent of jobs—while a staggering 72 percent of non-agricultural workers remain trapped in informality. Wages tell an even harsher truth: the average monthly wage is only PKR 39,042, far below what is needed to sustain a middle-income lifestyle. Meanwhile, unemployment has climbed to 6.9 percent, and youth unemployment remains painfully high. These are not the indicators of an economy preparing to soar; they are the markers of one stuck in neutral.
What emerges from the LFS is the profile of a workforce that is young, underutilized, poorly skilled, and structurally trapped in low-productivity sectors. Nearly 35 percent of employment is still absorbed by agriculture—mostly low-return, subsistence farming. Manufacturing remains stuck at around 14 percent, showing no diversification or movement toward higher-value production.
Informal wholesale and retail trade is now the second-largest employer, reflecting a shift toward survivalist entrepreneurialism rather than productive enterprise. The economy is growing, but the jobs it creates are not jobs of the future—they are jobs of necessity.
The youth numbers are even more alarming. Pakistan adds 3.5 million people to the labour force every year, and yet the economy cannot absorb them into productive jobs.
The unemployment rate among 15–29-year-olds is 11.5 percent, much higher for educated youth. For women aged 15–29, unemployment is 14.3 percent, creating a pool of educated yet excluded citizens.
The NEET (Not in Employment, Education, or Training) rate remains high, especially for women. This is not a demographic dividend—it is a demographic risk.
The mismatch between education and employment is equally glaring. Despite improvements in literacy, the economy does not generate enough skilled jobs to absorb technically trained youth.
Only 2.9 percent of workers are engaged in online or gig-based work—shockingly low for a country with a massive young population. Digital platform employment should have been a natural escape path for youth, but limited skills, platforms, and infrastructure have restrained its growth.
Equally troubling is the rise in vulnerable work. Over 49 percent of working women are contributing family workers—unpaid and unprotected. Among men, own-account work dominates—signalling that people are self-employed not out of choice, but because no wage jobs exist. The quality of jobs has deteriorated even as the quantity has risen. An economy where only 1.3 percent of workers are employers cannot claim to be rising toward global competitiveness.
What does all this mean for Pakistan’s ambition to become a USD 3 trillion economy? It means the ambition, while inspirational, rests on an economic structure that cannot deliver it—not without a radical shift in policy thinking.
The key message from the LFS is simple: Pakistan does not have a productivity-driven labour market; it has a survival-driven one. Too many people are employed in low-return sectors; too few in dynamic, high-growth industries. Too many are outside the labour force; too few have skills aligned with the modern economy. Too many women are working unpaid; too few are transitioning into formal, high-productivity work.
If Pakistan is serious about its economic future, the labour market must be restructured—deliberately, urgently, and systemically.
The first priority must be massive skill transformation. Technical and vocational training is reaching too few people and remains misaligned with market needs. In the era of AI and automation, Pakistan needs a national programme of digital upskilling—not as a standalone initiative, but integrated with local governments, schools, and community centres. Every district should have a digital skills hub with AI-assisted learning tools accessible to all—especially women and rural youth.
Second, the economy must break free from its overdependence on agriculture and informal retail. That does not mean abandoning agriculture; it means commercializing it. The government should incentivize high-value crops, agritech adoption, and rural enterprise clusters linked with cold-chain logistics and processing. Rural Pakistan must become a site of value creation, not merely subsistence.
Third, formalization must be redefined—not as taxation, but as access. Informal workers will not enter the formal system if it brings only taxes and inspections. They will enter when it brings credit, insurance, market linkages, digital identity, and legal protections. Formalization without facilitation is harassment.
Fourth, Pakistan must dramatically increase female labour force participation. This requires targeted childcare support, safe transport, home-based digital work platforms, and legal enforcement of wage equality. Without women, no economy in history has achieved sustained high growth.
Fifth, wage inequality must be addressed through productivity-linked wage systems, sectoral minimum wages, and investments in enterprise modernization. Low wages are not a sign of competitiveness; they are a sign of structural weakness.
Finally, labour market governance must be decentralized. The LFS reveals what economists have long argued: a highly centralized system cannot manage diverse regional labour markets. Provinces—and ideally districts—must develop their own labour market information systems, skill councils, and employment strategies.
If there is one takeaway from the 2024–25 survey, it is this: Pakistan’s labour force is growing, but its economy is not growing with it. The structure of employment we see today will not carry Pakistan to the next economic frontier. The country’s real challenge is not just creating jobs, but creating the right jobs.
The LFS is not just a dataset. It is a mirror. And what it shows is not a nation preparing to take off—but one still building the runway.
Copyright Business Recorder, 2025
The writer is an Associate Professor at COMSATS University Islamabad and can be reached at drsaima4243@gmail.com