Over the past decade, Pakistan’s labour market has undergone significant transformations, reflecting shifts in employment patterns, workforce participation, and sectoral distribution. This comparative analysis explores key labour force indicators from 2010-11 and 2020-21, highlighting emerging trends and persisting challenges.
- Overall Labour Market Trends & Dynamics
The population grew by 48 million, with the working-age population increasing by 34.5 million. The labour force expanded by 14.5 million, reflecting a rising number of individuals seeking employment.
Employment saw a 13.4 million increase, yet unemployment also rose from 3.4 million to 4.5 million, highlighting persistent job market challenges. The youth (15-29) population grew by 10.8 million, with youth unemployment rising by 0.9 million, indicating the need for targeted policies to enhance job opportunities and skill development.
2. Labour Force Participation: Trends and Gender Disparities
Labour force participation in Pakistan has seen a slight decline over the past decade, dropping from 45.7% in 2010-11 to 44.9% in 2020-21. Both male (68.7% to 67.9%) and female (21.7% to 21.4%) participation rates decreased, with a more significant gap persisting between genders.
Rural participation declined from 49.1% to 48.6%, while urban participation fell from 39.5% to 38.8%, indicating a nationwide trend of lower workforce engagement.
3. Employment-to-Population Ratio: A Declining Trend
The employment-to-population ratio in Pakistan has slightly declined over the past decade, dropping from 43.0% in 2010-11 to 42.1% in 2020-21. Male employment decreased from 65.2% to 64.2%, while female employment saw a marginal decline from 19.8% to 19.4%, reinforcing existing gender disparities in the workforce.
Rural employment fell from 46.8% to 45.8%, while urban employment remained relatively stable, declining slightly from 36.1% to 36.0%.
4. Unemployment Rate: A Mixed Trend
Pakistan’s overall unemployment rate increased slightly from 6.0% in 2010-11 to 6.3% in 2020-21, with male unemployment rising from 5.1% to 5.5%, while the female rate remained unchanged at 8.9%. Rural unemployment saw a notable rise from 4.7% to 5.8%, indicating growing job shortages in non-urban areas, whereas urban unemployment decreased from 8.8% to 7.3%, reflecting improved job opportunities in cities. These trends underscore the need for rural employment initiatives and gender-inclusive economic policies to address disparities and enhance job creation.
5. Shifts in Sectoral Employment
Over the past decade, agricultural employment has declined significantly, dropping from 45.1% in 2010-11 to 37.5% in 2020-21, with both male and female participation decreasing. The shift away from agriculture is more pronounced in rural areas, where employment fell by 9.2 percentage points. Meanwhile, industry employment grew from 21.2% to 25.4%, reflecting an expanding industrial sector, particularly in rural areas. The services sector also saw growth, increasing from 33.7% to 37.2%, with a notable rise in female participation.
6. Employment Status
Over the past decade, paid employment increased from 36.0% to 42.0%, reflecting a shift toward formal job opportunities, particularly for males and rural workers. Own-account work saw a slight rise, while the proportion of contributory family workers declined significantly from 27.7% to 21.1%, indicating reduced reliance on unpaid family labour. However, informal sector employment remained high at 72.5%, with a sharper decline among females, highlighting ongoing challenges in transitioning to formal jobs, especially for women. These trends emphasize the need for job formalization, skill development, and gender-inclusive economic policies to enhance employment quality.
7. Informal Sector Employment: A Persistent Challenge
Informal sector employment in Pakistan remains high, with 72.5% of the workforce engaged in informal jobs in 2020-21, only a slight decline from 73.8% in 2010-11. While male informal employment saw a minor decrease (74.1% to 73.4%), female participation dropped more significantly from 71.1% to 65.5%, indicating shifting employment trends.
Rural areas continue to have a higher share of informal employment (76.2%) compared to urban areas (68.5%), though both saw slight declines.
8. Rising Youth Unemployment: A Growing Concern
The youth unemployment rate (15-29 years) increased from 8.7% in 2010-11 to 10.3% in 2020-21, reflecting mounting job market challenges for young workers. Male youth unemployment rose from 7.6% to 8.7%, while female youth unemployment saw a sharper increase from 12.0% to 15.1%, highlighting gender disparities in job access.
Rural youth unemployment surged from 6.7% to 9.3%, indicating a shortage of opportunities outside urban centres. In contrast, urban youth unemployment declined slightly from 13.2% to 12.5%, suggesting better job absorption in cities.
9. Education Level of Unemployed Youth
Over the past decade, unemployment among less-educated youth has declined, with those who never attended school dropping from 17.6% to 13.4% and those with primary but below middle education decreasing significantly from 19.4% to 10.3%. This suggests better access to basic education and improved employment opportunities for lower-skilled workers.
However, unemployment among highly educated youth (Degree, MPhil, PhD) has more than doubled, rising from 12.8% to 26.9%, indicating a serious mismatch between higher education and job market demands. With middle to below-degree level unemployment remaining relatively stable (49.4%).
