Employment increased by nearly 10 million over four years, but rapid labour force growth pushed unemployment to its highest level in the period.
ISLAMABAD: Pakistan’s unemployment rate increased to 7.1% in 2024-25, despite a substantial rise in employment and labour force participation, according to the Economic Survey of Pakistan 2025-26.
The survey, based on findings from the Labour Force Survey (LFS) 2024-25, shows that although the economy generated millions of new jobs over the past four years, the expansion of the working-age population and labour force outpaced employment growth, resulting in a higher number of unemployed people.
Labour force continues to expand
Pakistan’s working-age population and labour force both recorded significant growth between 2020-21 and 2024-25, reflecting increasing participation in the labour market.
| Indicator | 2020-21 | 2024-25 |
| Working-age population | 159.8 million | 179.6 million |
| Labour force | 71.8 million | 83.1 million |
| Employed labour force | 67.25 million | 77.2 million |
| Unemployed labour force | 4.51 million | 5.9 million |
| Unemployment rate | 6.3% | 7.1% |
| Labour force participation rate | 44.9% | 46.3% |
According to the survey, the working-age population increased by nearly 20 million, while the labour force expanded by more than 11 million during the four-year period.
Employment grows but fails to keep pace
The number of employed people rose from 67.25 million in 2020-21 to 77.2 million in 2024-25, indicating that the economy created almost 10 million additional jobs.
However, unemployment also increased, with the number of unemployed individuals rising from 4.51 million to 5.9 million.
As a result, the unemployment rate climbed from 6.3% to 7.1%, highlighting that job creation has not kept pace with the rapid growth of Pakistan’s labour force.
Labour force participation improves
The survey also recorded an increase in the labour force participation rate, which rose from 44.9% to 46.3%.
According to the report, the improvement suggests greater participation in the labour market, including increased engagement by young people and women seeking employment.
Manufacturing employment remains subdued
Sector-wise employment trends indicate limited expansion in manufacturing, despite broader economic activity.
The manufacturing sector’s share of total employment edged down slightly from 14.9% to 14.8%, suggesting that industrial growth has not been sufficient to absorb a larger share of the workforce.
By contrast, the construction sector registered modest gains, with its employment share increasing from 9.5% to 9.9%.
The Economic Survey attributes this improvement to infrastructure development, higher housing demand and increased public investment projects.
Faster job creation remains essential
The Economic Survey of Pakistan 2025-26 concludes that although employment opportunities have expanded and labour force participation has improved, Pakistan needs to accelerate job creation to match the continued growth of its working-age population.
The report emphasises that sustained economic growth, stronger industrial development, higher private investment and expanded infrastructure projects will be essential to creating productive employment opportunities and reducing unemployment in the years ahead.