ISLAMABAD: Pakistan’s economy is projected to grow between 3 and 3.6 percent in the current fiscal year, according to international institutions, though recent monsoon floods have dampened growth prospects, particularly in agriculture. Despite exceeding the country’s population growth of roughly 2.6 percent, this moderate expansion may not translate into meaningful job creation or poverty reduction.
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Experts warn that without swift, broad-based employment generation, Pakistan risks social unrest and strategic vulnerability amid a volatile regional and domestic security environment. Rising tensions in the Middle East, particularly between the United States and Iran, could disrupt global energy markets, inflate import costs, and slow investment, compounding domestic labour market challenges.
Structural factors are also constraining employment. Automation, mechanisation, and artificial intelligence adoption threaten jobs in manufacturing, customer service, and agriculture, with around 17 percent of the workforce considered at high risk of displacement. Labour-intensive sectors such as construction, textiles, and agriculture are no longer absorbing workers as they once did.
Small and medium enterprises (SMEs), which employ millions, are under pressure due to high compliance costs, limited access to finance, and regulatory burdens, pushing many into informal operations. Estimates place Pakistan’s informal economy at 35–40 percent of GDP, highlighting its role in sustaining livelihoods but also its vulnerability to regulatory shifts.
The public sector can no longer act as an employer of last resort. Federal hiring freezes, downsizing initiatives, and privatisation of state-owned enterprises have further limited job absorption. Even export growth in labour-intensive industries, particularly textiles, is failing to expand employment, reflecting a broader trend of “jobless growth.”
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Experts urge the government to implement bold interventions, including labour-intensive investment, SME support, workforce skill development, and education reform, to create meaningful employment opportunities and ensure social and economic stability.