Poverty in Pakistan has risen from 22 percent to 29 percent as job creation struggles to keep pace with the growing workforce, according to the World Bank’s latest economic report on the country.
The report highlights how rising prices and weak economic and productivity growth have put pressure on household incomes.
One in every six people entering Pakistan’s labor market since 2018 has remained without employment, the report said. Around 3.6 million people reach working age in Pakistan each year, adding to the pressure on the economy to create enough jobs.
Millions of Jobs Created, but Poverty Still Rises
Pakistan’s unemployment rate stood at 7 percent in 2024, with women and young people accounting for a disproportionately large share of those without jobs.
Although the country created 17.7 million jobs since 2018, most were concentrated in low-wage and low-productivity sectors, limiting their impact on household incomes and living standards.
The World Bank attributed the seven percentage point increase in poverty partly to severe inflation and sluggish economic growth. Rising living costs have added to the challenges facing households, while limited productivity gains have constrained opportunities for workers to earn higher incomes.
Pakistan’s Labor Productivity Remains Weak
Labor productivity growth averaged just 0.4 percent annually between 2014 and 2024, according to the report. The weak performance points to a persistent challenge: creating jobs that not only absorb new workers but also offer better wages and more productive employment.
The findings highlight the need for Pakistan to accelerate sustainable economic growth, improve labor productivity and expand access to better quality jobs.
Without stronger employment opportunities and higher earnings, the country will face continued challenges in reducing poverty and improving living standards.
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