Pakistan’s reported unemployment rate of 6.5%, ranking 24th in the world according to World of Statistics data, offers a glimpse into the country’s economic landscape. While seemingly favourable compared to other nations facing higher unemployment challenges, it conceals a critical aspect that needs attention.
One major concern is the prevalence of a massive informal sector in Pakistan. The numbers might either be underreported or skewed due to a significant portion of the population working in informal and unregistered jobs. These workers, while employed, do not contribute to official employment statistics, which can paint an incomplete picture of the actual unemployment scenario. While Pakistan fares better than countries like Nigeria (33.3%), South Africa (32.9%), and Bosnia and Herzegovina (29.28%), it still lags behind its regional neighbour Bangladesh, which has a lower unemployment rate of 4.7%. This discrepancy calls for a closer examination of the factors affecting job creation and employment opportunities in Pakistan. Moreover, when compared to economic powerhouses like China and Canada, each with a 5.2% unemployment rate, Pakistan can be inspired to take further steps to boost job opportunities and foster economic growth. The contrast with Qatar, having the lowest unemployment rate of 0.1%, illustrates the benefits of a thriving formal sector that offers abundant job opportunities. Pakistan needs to enhance its formal economy and encourage businesses to register and participate in the formal job market to reduce the reliance on informal labour. To address the issue, Pakistan must focus on formalising the informal sector, encouraging small businesses to register, and providing them with incentives. This way, more workers can be included in official employment statistics, leading to a more accurate representation.
Investments in key sectors and skill development programs remain vital to create sustainable employment opportunities. By promoting entrepreneurship and supporting small and medium-sized enterprises, Pakistan can tap into the potential of its workforce and stimulate economic growth.
Published in The Express Tribune, July 5th, 2023.
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