The economic situation in Pakistan over the last few years has been characterized by low rates of economic growth,[1] declining levels of investment, moderate and falling inflation, food insecurity and severe energy, gas and water shortages. An on-going security situation remains volatile with terrorism not being contained accompanied by political unrest, internal instability and the deteriorating law and order situation. The impact of these factors led to the closure of many industrial units and ultimately job losses[2]. The large scale natural disasters in recent years have had a particularly negative impact on the rural economy[3]. 

Pakistan has been under a US$ 6.64 billion Extended Fund Facility (EFF) program of the International Monetary Fund since September 2013 when the economy was on the verge of a balance of payments crisis. There was a spate of good news towards the end of 2014; the country was able to float the Ijara Sukuk Bonds in the international market, albeit at a somewhat high cost. The exchange rate stabilized and Pakistan was able to rebuild its foreign exchange reserves. Due to falling international oil prices, the rate of inflation came down sharply to 2.1 per cent by April 2015, the lowest since September 2003[4]. The GDP growth accelerated to 4.24 percent in 2014-15, with the growth momentum being broad based, as all major sectors supported it[5]. Growth is projected to increase to 4.5 percent in 2015-16 and 4.8 percent in 2016-17[6].  

Pakistan is currently the sixth most populous country in the world with an estimated population of 191.71 million in 2015[7] and a population growth rate of 1.92 percent[8]. Urban population has increased from 72.5 million in 2014 to 75.19 million in 2015 while rural population has increased to 116.5 million from 115.5 million in 2015. Pakistan is a lower middle-income country[9] with a Gross National Income per capita, (Atlas method) of US $ 1,410 in 2014[10]. The economy is non-diversified and lacks product diversity.  Pakistan is the  4^th largest producer of cotton in the world with a huge potential to further increase crop yield. The textile industry is the driving force of Pakistan’s economic growth and accounts for 57 percent of Pakistan’s total exports (Jul-Mar 2014-15)[11] of which approximately 74 percent are to the European Union (EU). It also provides employment to about 40 percent of Pakistan’s industrial workforce and contributes eight percent towards the Gross Domestic Product[12]. The textile industry has high potential for growth but capacity utilization is low, primarily due to insufficient supply of electricity and gas amongst other factors, which limit the production capacity of the industry.

Agriculture is at the heart of the rural economy, accounts for almost a quarter of Pakistan’s total economy with 61 percent of the population classified as rural[13] and has strong backward and forward linkages. Agriculture growth stood at 2.9 percent during July-March, 2014-15.[14] Water resources are scarce throughout most of the country, particularly in Baluchistan, and finding water for irrigation is a critical challenge for the agriculture sector, particularly in remote and underserved areas[15]. The Food and Agriculture Organization (FAO) has estimated that Pakistan cannot achieve sustained high GDP growth rate of seven to eight percent unless its agriculture sector grows at least by four percent[16], which, is likely to require extensive interventions in order to bridge the yield gap. There is also need to support non-farm activity in the rural areas to make growth more inclusive and improve quality of life in the rural areas.

Pakistan’s ranking of 146 on the UNDP Human Development Index in 2012 and 2013 out of 187 countries, was lower than that of countries at similar level of income with an HDI of 0.535 and 0.537[20], respectively putting it in the low human development countries’ category. Overall poverty situation in 2010-11 appears to have improved, with the official poverty headcount, based on consistent consumption-based estimates at around 12.4  per cent down from 17.2 per cent in 2007-08[21]. This reduction in poverty can be attributed to higher pro-poor expenditures of the government, which increased to 14.16 percent of GDP in 2013-14[22]. Major social protection programs – the Benazir Income Support Program, Pakistan Poverty Alleviation Fund (PPAF), Zakat, Pakistan Bait-ul-Mal (PBM) have played an important role in addressing poverty and vulnerability in a targeted manner. Consumption based Gini coefficient does not indicate severe inequalities in Pakistan ranging between 0.3027 and 0.2752 from 1998-99 to 2010-11, with inequality historically being higher in the urban centers as opposed to rural regions of the country[23].  

The Constitution of Pakistan promotes equality at work through Articles 25 and 27[27].  These Articles state that “there shall be no discrimination on the basis of sex”; and “no citizen otherwise qualified for appointment in the service of Pakistan shall be discriminated against in respect of any such appointment on the ground only of race, religion, caste, sex, residence or place of birth”[28]. Thus, the concept of decent work is in conformity with the provisions of the Constitution of Pakistan.