Arshad Mahmood Awan
Among the many pressing concerns highlighted by the federal budget for 2025–26, the most urgent yet continuously ignored issue is Pakistan’s worsening unemployment crisis—particularly youth unemployment. Despite its significance, the government’s response remains inadequate, lacking both strategic vision and immediate policy action. This neglect is not only short-sighted but also deeply damaging to the country’s social fabric and long-term economic prospects.
According to the Economic Survey 2024–25, the overall unemployment rate in Pakistan stands at 6.3%. However, the problem is far more acute for the youth aged 15 to 24, where unemployment soars to 11.1%. This segment alone represents nearly 45% of all jobseekers, a staggering statistic that underscores the scale of the crisis. Yet, despite this alarming trend, the government’s budget fails to propose any serious, targeted plan to tackle youth unemployment.
The crisis is further exacerbated by persistent gender disparities in the labour market. Young women face a significantly higher unemployment rate—14.4% compared to 10% for young men. This reflects both a structural exclusion of women from the economy and a broader failure to build inclusive labour policies. Unfortunately, the government’s budgetary priorities offer no meaningful remedies for correcting this imbalance. Without proactive measures to bring more women into the workforce, half of the country’s economic potential remains untapped.
Compounding these issues is a critical mismatch between the skills young people possess and those demanded by the labour market. Pakistan’s education system continues to emphasize degrees over practical training, resulting in a workforce that is unprepared for the realities of employment. Graduates with limited technical skills and no exposure to applied learning enter a job market that increasingly demands adaptability, digital fluency, and vocational competence. Despite clear evidence of this mismatch, the government’s budget fails to offer any comprehensive skills development strategy that could bridge this widening gap.
What is even more troubling is the government’s reliance on outdated data to shape policy. The Economic Survey uses unemployment figures based on the 2020–21 Labour Force Survey—a dataset that is nearly four years old. The excuse offered is the delay caused by the 7th Population and Housing Census, which concluded two years ago. This bureaucratic justification exposes a lack of urgency and strategic focus. A nation grappling with mass unemployment cannot afford to make policy decisions based on obsolete figures. The fact that updated labour market data was not prioritized in time for the budget process highlights a worrying absence of institutional seriousness in tackling unemployment.
Beyond data, the budget also fails to present any forward-thinking vision for employment generation. It does not include any initiative for expanding technical and vocational education, nor does it introduce reforms for upgrading polytechnic institutes. A country where millions of young people are entering the workforce each year requires a parallel investment in practical education that aligns with real-world job needs. Technical education is not a side issue—it must be central to any employment strategy.
Well-functioning polytechnic and vocational training institutes can be transformative. They offer alternatives to traditional academic paths and create a pipeline of workers equipped for employment in construction, healthcare, IT, and other vital sectors. Unfortunately, this year’s budget offers no fiscal incentives for establishing such institutions, no regulatory framework for quality assurance, and no partnerships with the private sector to make skills training a national priority. The opportunity to lay the groundwork for long-term economic empowerment through education has been missed once again.
Moreover, the government has ignored the vital role that the corporate sector could play in addressing youth unemployment. Structured apprenticeship and internship programs—if incentivised properly—can offer young people essential workplace experience while giving companies access to trained, motivated entry-level workers. Other countries have successfully implemented such models, but Pakistan’s budget makes no mention of this pathway, reflecting a siloed and state-centric view of job creation that has long proven ineffective.
Beyond education and training, small and medium-sized enterprises (SMEs)—which form the backbone of Pakistan’s informal economy—remain under-leveraged in terms of job creation. These businesses are inherently labour-intensive and capable of absorbing a large portion of the unemployed workforce. However, the government has failed to provide SMEs with the support needed to scale up and formalize. There are no new credit facilities, no tax reforms for small businesses, and no concrete steps toward their integration into the formal financial system. Without supporting SMEs, the job market will remain narrow and fragile.
In addition, there has been no serious effort to invest in labour-intensive sectors such as agriculture, manufacturing, or construction. These industries hold the potential to generate mass employment at relatively low investment thresholds, especially for semi-skilled and unskilled workers. Similarly, the rapidly growing digital economy—an area with enormous potential for youth entrepreneurship—has been completely sidelined. No dedicated funds, incubation platforms, or tax incentives for digital start-ups have been proposed in the budget, again revealing a lack of imagination and forward planning.
Ultimately, any viable solution to Pakistan’s unemployment crisis must involve a two-pronged approach: equipping the workforce with relevant, market-aligned skills and creating an enabling environment for the private sector to drive job creation. These principles are absent from the current budget, which appears to treat unemployment as a marginal issue rather than a national emergency. This is not just a policy oversight—it is a profound governance failure.
In conclusion, the 2025–26 federal budget does little to acknowledge, let alone solve, the country’s most pressing socio-economic challenge. The youth of Pakistan—its most dynamic and promising demographic—continue to be neglected by an outdated, data-deficient, and unimaginative policy regime. Without targeted interventions in skills training, SME development, and private-sector engagement, the unemployment crisis will only deepen. The cost of inaction is not just economic stagnation but the potential alienation of an entire generation.
