The International Labour Organization (ILO), in its recent employment outlook report, highlighted Pakistan’s employment-to-population ratio for 2023, which stands at a historic low of 47.6 percent.
The report indicates that Pakistan’s recovery from the pandemic and economic catastrophe remains incomplete, with an estimated 5.6 million people expected to be unemployed in the current year, marking a concerning increase of 1.5 million since 2021.
These projections are in line with the International Monetary Fund’s (IMF) forecast of an 8.5 percent unemployment rate for 2023, a notable increase from the 6.2 percent rate recorded in 2021.
The report also underscores persistent gender disparities in unemployment, with consistently higher rate of females without work, which could potentially rise to 11.1 percent.
The ILO’s estimates suggest that Pakistan’s employment-to-population ratio for 2023 is at 47.6 percent, falling below the pre-crisis trend-line and lowest in decades. Concurrently, the number of jobless individuals is projected to reach 5.6 million, marking an increase of 1.5 million since 2021.
The report raises concerns about the potential long-term setbacks to Pakistan’s pursuit of decent work standards due to stagnant job growth and escalating unemployment.
These labor market challenges reflect the cumulative economic stress experienced by Pakistan, exacerbated by the Covid-19 crisis, the 2022 floods, and recent macroeconomic instability.
To address these issues, Pakistan reached an agreement with the IMF in July 2023, securing a $3 billion standby arrangement (SBA) aimed at averting a debt default and bolstering investor confidence. However, the SBA and associated constraints on public financing may exert additional pressure on labor market prospects, at least in the short term.
Geir Tonstol, ILO Country Director for Pakistan, stated, “Pakistan faces a range of challenges that are taking a toll on its labor market, resulting in increased informality and out-migration. The ILO, through its Fourth Decent Work Country Programme (DWCP), is committed to addressing the difficulties faced by workers and enterprises and seeking solutions to enhance livelihood security during these challenging times.”
In 2023, Pakistan’s employment-to-population ratio is projected at 47.6 percent, a decline of approximately two percentage points from the pre-crisis ratio in 2019. When compared to a scenario without the Covid-19 crisis, employment figures for 2022 are estimated to fall short by 1.8 million jobs, with the “jobs gap” expected to widen to 2.4 million in 2023.
In tandem with the 2022 floods and the ongoing financial crisis, Pakistan’s economy is grappling with negative growth and mounting inflationary pressures, posing increasing challenges for both businesses and households.