Zafar Iqbal
Pakistan’s latest Labour Force Survey, released after four years, exposes a grim and unsettling trajectory for the national economy. Instead of showing signs of recovery, unemployment has intensified, highlighting a system that is increasingly unable to generate stable and dignified work. The overall unemployment rate has now climbed to a twenty-one-year high of seven point one percent, reflecting a structural weakness that has deepened over time. In absolute numbers, the crisis becomes even more alarming as the total unemployed population has surged from four point five million in 2020-21 to five point nine million in 2024-25, meaning nearly one point four million more Pakistanis are searching for work without success.
This growing unemployment is not confined to one region or demographic group. Instead, it cuts across rural and urban areas and affects both men and women. Youth unemployment remains especially worrying, as those aged fifteen to twenty nine now face joblessness at a rate of eleven point five percent, up from ten point three percent four years earlier. With millions of young people entering the labour force every year, Pakistan’s inability to offer them meaningful employment threatens long term economic and social stability. The story for women is even more difficult, as their unemployment rate has risen from eight point nine to nine point seven percent, reflecting persistent barriers to inclusion despite growing participation.
Rural Pakistan is also experiencing a visible rise in joblessness, moving from five point eight to six point three percent, while unemployment in cities has increased from seven point three to eight percent. At the same time, labour force participation has expanded substantially, with nearly eighty six million Pakistanis aged ten and above working or looking for work. Each year, roughly three and a half million new individuals enter the labour force, intensifying the pressure on an already stressed job market. This combination of rising participation and declining job creation reveals a widening gap between economic potential and economic performance.
A core driver of this crisis is the persistent skills mismatch across the country. Pakistan’s youthful population lacks the competencies required by the modern job market, leaving millions unprepared for industries that demand specialised and technical abilities. Meanwhile, the economy suffers from stagnant foreign investment, dwindling domestic business confidence and the steady departure of multinational firms that once provided both jobs and training. When capital retreats, opportunities shrink. Thus, the unemployment challenge is not simply a statistical trend but a reflection of deeper structural weaknesses.
Unfortunately, policymakers continue to misdiagnose the problem. Instead of acknowledging systemic failures, leaders often shift responsibility elsewhere. Statements such as the planning minister’s claim that unemployment is a result of strict IMF conditions and climate disasters reflect a troubling reluctance to accept policy accountability. While both external shocks matter, they do not absolve the ruling elite of years of weak planning, fragmented governance and the absence of long-term economic vision. Capital moves towards stability and confidence, yet Pakistan’s internal environment remains volatile, discouraging both entrepreneurs and investors who could otherwise generate employment. Follow Republic Policy
The path forward demands a comprehensive realignment of priorities. Pakistan needs to expand and strengthen vocational and polytechnic training to address the skills gap that has left millions unemployable from the outset. Investing in technical education can empower young workers with industry-ready abilities, opening practical pathways for careers in manufacturing, digital services, renewable energy, logistics and agriculture technology. Similarly, the country must reinvigorate its small and medium enterprise sector, which is labour-intensive and capable of generating large scale employment if given policy support, financing and stable infrastructure. Revitalising rural economies is equally important, as this can reduce urban congestion and allow local industries to develop outside major cities.
Yet even these reforms will fall short unless Pakistan confronts the structural barrier of elite capture. For decades, power and resources have remained concentrated in the hands of narrow interest groups that resist meaningful reform because it threatens their privileges. Job creation requires transparent institutions, fair competition and a governance model that prioritises public welfare over elite benefit. Without addressing this fundamental imbalance, efforts to uplift the labour market will remain fragmented and ineffective. Millions of young Pakistanis will continue to cycle through limited opportunities, leaving the country trapped in a pattern of frustration, underdevelopment and wasted potential.
