- How Pakistan’s Economic Policies Are Decimating Its Workforce and Economy
In the light of Pakistan’s economic “reforms,” a serious economic crisis unfolds with disturbing precision. The Pakistani worker has become collateral damage in an economic experiment that sacrifices human dignity at the altar of macroeconomic indicators. Pakistan’s unemployment rate has surged to 8.5% in 2023, up dramatically from 6.2% in 2021. This translates to 5.6 million Pakistanis actively seeking work and finding none, an increase of 1.5 million unemployed persons in just two years. For women, the situation is measurably worse, with female unemployment rates reaching a staggering 11.1%, compared to their male counterparts. The employment-to-population ratio has plummeted to 47.6% in 2023, nearly two percentage points below pre-crisis levels (49.1% in 2019) and the lowest in decades outside the COVID anomaly. Compared to what should have been without the current crisis, Pakistan faces an estimated “jobs gap” of 2.4 million in 2023 alone, jobs that should exist but don’t, livelihoods that should sustain families but have vanished.
What makes these statistics particularly damning is the government’s direct role in exacerbating unemployment. Under the euphemistic banner of “rightsizing,” the Pakistani state has systematically eliminated 11,877 positions from public sector employment. This isn’t economic management; it’s deliberate job destruction during an unemployment crisis. The assault has been calculated in its targeting. Over 5,000 low-grade government positions have been eliminated, disproportionately affecting the most economically vulnerable workers. Meanwhile, the upper echelons of bureaucracy remain largely untouched, their inflated salaries, bonuses, and perquisites preserved while workers at the bottom are told to sacrifice for “fiscal discipline.”
The government’s privatization agenda represents perhaps the most comprehensive assault on stable employment in Pakistan’s recent history. Iconic national institutions built through decades of public investment Pakistan Steel Mills, Pakistan International Airlines (PIA), and the Water and Power Development Authority (WAPDA) are being dismantled and sold off piece by piece. The human cost is staggering. At Pakistan Steel Mills alone, over 9,000 workers were laid off in 2020 when the government declared the entity “dysfunctional.” Many of these workers had decades of service, specialized skills, and families dependent on their income. Their compensation packages proved woefully inadequate against the backdrop of Pakistan’s 29.6% inflation rate in 2023 (up from 12.1% in 2022).
The recently introduced Uniform Labour Code 2024 represents the systematic dismantling of worker protections built over generations. This legislation effectively normalizes precarious employment through weakening trade union formation requirements, expanding contract-based employment without benefits, legalizing hiring through third-party agencies that shield employers from responsibility, removing or weakening provisions for workplace safety, and limiting workers’ ability to collectively bargain. The consequences are already visible. The formal sector continues to contract while informal employment expands reaching a shocking 84.3% of total employment in 2021, up 3 percentage points for men and 1 percentage point for women since 2013. Being pushed into informality means no sick leave, no maternity benefits, no pension rights, and no job security.
The plight of workers at the National Database and Registration Authority (NADRA) exemplifies the broader crisis. Despite operating a sophisticated national identification system critical to Pakistan’s security and governance, thousands of NADRA employees have worked for decades on temporary contracts, denied permanent status, pensions, and even basic employment rights. The government’s systematic dismantling of pension rights means that after dedicating their productive years to national service, elderly Pakistanis face abandonment by the institutions they served. While high-ranking bureaucrats and politicians secure generous retirement packages for themselves often including land allotments, dedicated staff, and inflation-protected benefits, ordinary workers see their post-retirement security rapidly eroding. The World Bank estimates that 37.2% of Pakistanis could fall below the poverty line (USD 3.65 per day, 2017 PPP) adding 3 million more people to the ranks of the impoverished.
This devastation unfolds against the backdrop of economic policies dictated by international financial institutions with minimal regard for social consequences. The $3 billion Stand-By Arrangement with the IMF secured in July 2023 comes with structural conditionalities that directly impact employment: aggressive taxation measures increasing the cost of doing business, energy price hikes that devastate small enterprises, “governance reforms” of state-owned enterprises that translate to mass layoffs, and fiscal tightening that removes economic stimulus precisely when it’s most needed. The results are predictable: Pakistan’s GDP growth contracted to negative 0.5% in 2023, while inflation soared to 29.6% creating the perfect storm for job destruction and wage devaluation.
The increasing exodus of workers seeking opportunities abroad speaks volumes about the hopelessness pervading Pakistan’s labor market. In 2022 alone, over 800,000 professionals left Pakistan, according to government data an unprecedented brain drain representing not opportunity but desperation. Those without means to emigrate legally increasingly risk their lives through dangerous, informal migration channels. These statistics fail to capture the full human tragedy unfolding across Pakistan. As households cut essential expenses for food, healthcare, and education, doors to upward mobility close for an entire generation. School dropout rates increase, preventable health conditions go untreated, and nutritional standards collapse. Women and girls suffer disproportionately, their education, training, and employment opportunities the first to be sacrificed when households face economic pressure. The female labor force participation rate, already among the world’s lowest at 21.5%, faces further erosion as employment opportunities contract.
Pakistan desperately needs a complete reorientation of economic priorities. This includes developing integrated provincial-level recovery strategies focused on decent job creation, particularly for women and youth; maintaining government spending on social protection, not as charity but as economic stabilizers; implementing labor-intensive climate adaptation programs that create jobs while addressing environmental vulnerabilities; and reinforcing social dialogue as an instrument for stability, where workers’ voices are heard and respected. Most importantly, Pakistan needs leadership that understands a fundamental economic truth: workers are not simply costs to be minimized but the ultimate source of sustainable growth and development. (Foreign Media)