Salaried Pakistan

If you read this magazine, the odds are very high that you are a salaried individual in Pakistan. And the odds are just as high that you likely complain about your salary levels. You are, however, among the lucky ones in Pakistan in that you get paid in the form of a regular monthly salary. Less than one quarter of Pakistanis who work receive their compensation this way, That number, however, has been steadily rising, and with its rise will come the slow conversion of Pakistan’s informal employment sector into its formal employment sector.

While a handful of young professionals in the country work for global employers and offer their services to companies operating at the cutting edge of technology, the bulk of Pakistan’s labour force is actually quite premodern: informal employment arrangements, working in close proximity to family, and may not always be paid in cash, and generally tied to closely monitored output rather than a fixed monthly amount.

According to the 2021 Labour Force Survey, the most recent one conducted by the Pakistan Bureau of Statistics, about 22.5% of Pakistan’s labour force consists of employed individuals who receive a regular monthly salary. While the PBS has not historically tracked this number for previous years, Profit’s analysis of the data – as well as other data sources – suggests that this number is rising, and with it changing the composition of what being employed in Pakistan means.

Banking industry data indicates that growth in the number of salaried individuals may be considerably more rapid than what the labour force is implying: perhaps having doubled over the past five years. While we believe that rapid a pace of growth is unlikely, it is nonetheless true that Pakistan’s economic landscape is shifting towards more formalized employment arrangements.

So what does this mean for the country and its economy? The story starts with why a monthly salary is a preferable default for compensation for a country’s labour force. We then examine some of the data that shows how fast this category has been growing, followed by implications of what this might mean for the banking sector, the government, and other businesses.