Unemployment at 21-Year High Amid Rising Poverty in Pakistan

Pakistan’s fragile economic recovery is colliding with a harsh social reality.

New government survey findings reveal soaring poverty, widening inequality and shrinking real incomes, underscoring the human cost of prolonged economic mismanagement.

Why has Pakistan’s poverty rate climbed to an 11-year high?

According to preliminary findings for fiscal year 2024–25 reported by The Express Tribune, Pakistan’s poverty rate has surged to 28.9 per cent, the highest level since 2014. Nearly 70 million people now live below the monthly poverty threshold of Rs 8,484.

The figures mark a sharp deterioration from 21.9 per cent in 2019, representing a 32 per cent increase compared to 2018–19, when the last survey was conducted. The rise exposes structural weaknesses that have deepened over the past several years.

Rural communities have suffered the most. Poverty in villages jumped from 28.2 per cent to 36.2 per cent, while urban poverty rose from 11 per cent to 17.4 per cent. Provincial breakdowns reflect similar distress. Punjab’s poverty rate increased from 16.5 per cent to 23.3 per cent, Sindh’s from 24.5 per cent to 32.6 per cent, Khyber Pakhtunkhwa’s from 28.7 per cent to 35.3 per cent, and Balochistan, already the poorest province, from 42 per cent to 47 per cent. In Khyber Pakhtunkhwa and Balochistan, security concerns and limited market access have compounded economic hardship.

How has inequality reached its worst level in nearly three decades?

While poverty expands, inequality is intensifying. Income inequality has climbed to 32.7 — the steepest level since 1998 — reflecting a widening gap between those who can withstand economic shocks and those who cannot.

The report highlights a 12 per cent decline in real household incomes over seven years. Although nominal incomes have risen, inflation has consistently outpaced earnings, eroding purchasing power. Real household expenditures have fallen by 5.4 per cent, signalling growing financial strain across households.

Unemployment now stands at 7.1 per cent — the highest in 21 years — while large-scale manufacturing remains below pre-pandemic levels. The data suggests that macroeconomic stabilisation has yet to translate into tangible relief for ordinary citizens.

Are IMF-backed reforms worsening short-term pain?

Planning Minister Ahsan Iqbal acknowledged that IMF-backed stabilisation measures — including subsidy cuts, currency devaluation, energy price hikes and higher taxes — intensified inflationary pressures.

However, he argued that long-term growth and wealth creation, rather than cash transfers alone, are essential to reverse the trend.

Despite official claims of macroeconomic stabilisation, the survey data presents a sobering picture. Rising poverty, declining real incomes and record inequality suggest that ordinary Pakistanis are bearing the brunt of years of flawed policy decisions and stalled structural reforms.

(With inputs from ANI)