Published: 07:45 PM, 14 December 2025
A distorted picture: Economists question credibility of Pakistan’s Labour Force Survey 2024-25
Federal Finance Minister, Muhammad Aurangzeb unveils the Pakistan Economic Survey 2024-25, a pre-budget document at Ministry of Finance on June 9, 2025. — APP
Pakistan’s latest Labour Force Survey (LFS) for 2024-25 has triggered a wave of scrutiny among economists, statisticians, and policy observers who believe the report falls well short of capturing the true scale of joblessness in the country. Released by the Pakistan Bureau of Statistics (PBS), the survey was expected to offer an authoritative snapshot of the national employment landscape. Instead, it has opened a contentious debate about the accuracy of its findings and the assumptions underlying its methodology. The widening gap between the LFS and other official datasets particularly the 2023 Population and Housing Census has raised questions not only about data quality but also about how unemployment is being understood and interpreted by the state.
Discrepancies that cannot be ignored
The most glaring inconsistency lies in the massive difference between the unemployment figures presented by the LFS and those recorded in the census. According to the LFS, Pakistan’s unemployment rate stands at 7.1 percent. The census, however, puts the figure at a staggering 22.5 percent—more than triple the LFS estimate. While sampling errors, coverage issues, and methodological constraints can explain minor deviations, the sheer scale of this discrepancy has left many analysts unconvinced.
Economists argue that a divergence of this magnitude cannot be dismissed as a statistical quirk. Instead, it points to deeper structural problems in how labour market data is collected and categorised. A key example is the survey’s practice of counting individuals who engage in small-scale household poultry rearing as “employed,” even when such activities do not provide meaningful income or contribute substantially to household welfare. The inclusion of such marginal activities inflates employment figures and artificially suppresses the unemployment rate, creating an overly optimistic portrait of the labour market.
A troubling surge in joblessness
Beyond the methodological debate, the LFS reveals several troubling labour market trends that have been building over the past few years. The unemployment rate has risen from 6.3 percent to 7.1 percent—now at a 21-year high. But even this modest-seeming percentage masks the severity of the crisis. In absolute terms, the number of unemployed people has surged by 31 percent, reaching 5.9 million. This sharp increase highlights the immense pressure placed on an economy that is failing to generate enough job opportunities to absorb the approximately 3.5 million new entrants joining the labour force each year.
Pakistan’s economic slowdown, marked by sub-2 percent annual growth, has compounded these labour market pressures. As growth stagnates, job creation has faltered, leaving millions without work or dependent on precarious, low-paid employment. The rise in unemployment spans all age brackets and genders, but its effects are most pronounced among young people aged 15 to 29. This demographic, which should ideally be transitioning into productive careers, finds itself grappling with limited prospects and mounting frustration.
The crisis is particularly acute for educated youth. Close to one million degree holders are currently unable to find work a significant indicator of both labour market mismatch and declining economic dynamism. For a country with a rapidly growing young population, this represents a troubling trajectory, hinting at deeper social unrest and long-term economic consequences if left unaddressed.
Real wages eroded by inflation
Another concerning trend highlighted by the report is the widening gap between nominal wages and real purchasing power. While average wages have edged upward over recent years, these gains are quickly eroded when viewed against the backdrop of persistent inflation. Workers who appear to be earning more on paper are, in reality, bringing home less value than they did in 2021. This erosion of real income has left households struggling to maintain living standards and has exacerbated economic insecurity across the country.
Inflation has eaten into wage increases so decisively that many employed individuals find themselves in no better position than those classified as unemployed. Essential expenditures—food, energy, transport, and housing have consumed an ever-larger share of household income, leaving little room for savings, investment, or upward mobility. This phenomenon further muddies the labour market picture and hints at an even broader crisis of livelihood beyond what the unemployment rate alone can capture.
A shifting employment landscape
The LFS also points to a significant structural shift in employment patterns within Pakistan.A growing number of people are leaving agriculture traditionally the backbone of rural livelihoods and migrating toward urban centres in search of work. Agriculture’s share in total employment has fallen sharply, dropping from 37.4 percent to 33.1 percent. This transition is not indicative of industrial expansion or the growth of a modern services sector; rather, it reflects the movement of people into informal, low-paid, daily-wage jobs that offer little security or long-term stability.
Such urban migration strains already stretched city economies and social infrastructure, while depriving rural regions of productive labour. The rise of informal service-sector work, much of it unregulated and unprotected, signals a labour market unable to provide formal or sustainable employment avenues for its growing workforce.
Growing regional imbalances
The LFS further reveals stark regional disparities in unemployment across Pakistan. Khyber Pakhtunkhwa (KP) records the highest rate at 9.6 percent, followed by Punjab at 7.1 percent, Balochistan at 5.5 percent, and Sindh at 5.3 percent. These figures reflect not only divergent economic conditions across provinces but also deepening inequalities in job opportunities, access to markets, infrastructure development, and demographic pressures. This uneven landscape complicates national-level policy responses and suggests that labour market stress is manifesting differently across regions.
The higher unemployment in KP, for instance, mirrors a combination of demographic shifts, limited industrialisation, and ongoing economic disruptions. In contrast, provinces like Sindh and Punjab face different labour market challenges, despite their lower headline unemployment rates.
Unpaid labour: The invisible majority
Perhaps the most startling statistic in the report concerns unpaid labour. Of the 179.6 million working-age individuals in Pakistan, 117.4 million most of them women are engaged solely in unpaid domestic and care work. This means that three out of every four working-age women remain confined to unpaid household responsibilities, effectively excluded from the formal labour force. This vast reservoir of invisible labour underscores the limited economic participation of women and the constraints imposed by cultural norms, lack of opportunities, and inadequate support systems.
The sheer scale of unpaid work in Pakistan presents a profoundly distorted view of labour force participation and challenges any attempt to accurately assess the country’s economic potential. (By, Delwar Hossain, Journalist & views are personal.)
