Pakistan Labour Market Dynamics: The Way Forward for Unemployment, Informal Employment, And Interventions to Promote Efficiency and Growth of the Labour Market

Abstract

Pakistan labour market dynamics are characterised by multiple challenges and contradictions that continuously elevate joblessness, widespread informalization of employment and poor structural efficiencies. Using the latest available empirical data, 2018- 2026, this article examines labor market dynamics. Empirical research findings reveal an unemployment rise from 5.8% in 2018 to almost 6.9% as of 2024, and youth unemployment lies between the 11.8-22% range. Informal labour markets continue to dominate employment at 72.5%, causing massive effects on women and other vulnerable workers. There are still prominent gender disparities accentuated by low female LFPR participation, while almost three in four men are actively engaged in the labour force. Skills gaps are critical, only over 60% of the young worker  derive from informal training systems, resulting in low productivity and inadequate formal sector absorption. Sectoral dynamics reveal a decline in agriculture alongside increased exceptional expansion in services. Policy analyses divulge weak implementation of existing interventions, making a case for in-depth reforms for efficiency and inclusive growth in TVET, constituting formalization and gender-inclusive programs and institutions.