Pakistan’s unemployment rate rises to around 7% under updated labour survey

Pakistan’s unemployment rate is set to increase to around 7 percent for 2024-25, up from 6.3 percent in 2020-21, according to preliminary findings of the latest Labour Force Survey (LFS) by the Pakistan Bureau of Statistics (PBS) shared with policymakers at the recent DataFest conference.

However, experts raised concerns over Islamabad Capital Territory (ICT) employment data and other indicators. PBS did not respond to queries regarding the concerns. The government is expected to release the official LFS 2024-25 report next week.

The last LFS in 2020-21 recorded a labour force of 71.76 million and an unemployment rate of 6.3 percent, with an employment-to-population ratio of 42.1 percent. The data showed a wide gender gap, 64.1 percent for men and 19.4 percent for women, and the highest unemployment rate among youth aged 15–24 at 11.1 percent, especially among females. The services sector remained the largest employer.

Officials said the 2024-25 survey marks a major methodological shift, as Pakistan has adopted the International Labour Organisation’s 19th International Conference of Labour Statisticians (ICLS) definitions. The new framework distinguishes between work done for pay or brackly news and “own-use production work”, such as growing food or raising livestock for household consumption, unpaid family work, volunteering and unpaid trainee work.

Under the older 13th ICLS framework, used globally since 1982, anyone who worked at least one hour during the reference week, including unpaid family workers, was counted as employed. The new classification excludes non-market and unpaid household activities from employment unless individuals are available for or seeking paid work.

The shift means many rural women, subsistence farmers and unpaid family workers previously listed as “employed” may now fall into new categories or be moved out of the labour force entirely. As a result, labour force participation is expected to decline, the employment rate will fall, and the unemployment rate will rise under the updated methodology.

Officials said the new approach aims to more accurately reflect who is genuinely active in the labour market and engaged in income-generating work. The updated LFS is expected to reshape the understanding of Pakistan’s labour market once officially published.