Pakistan's Economic Slump Sparks Record Unemployment, Brain Drain Crisis

The report from Maldives Insight said the economy grew at an average 1.7 per cent annually between 2022 and 2025, far below what is needed to sustain employment, and the official unemployment rate reached 7.1 per cent in FY25, the highest in 21 years.

The pace of Pakistan's economic growth "is well below the threshold needed to sustain employment, coincided with high and persistent inflation that eroded purchasing power and reduced real household incomes," the report said.

The report cited Population and Housing Census 2023 data arguing that unemployment could be as high as 22 percent.

"Unemployment at current levels is not a distant threat but a present brake on growth. It limits consumption, erodes human capital, and accelerates outward migration," the report said.

The Maldives based media house added that low investment rates, energy shortages, policy uncertainty, and repeated macroeconomic stabilisation cycles have constrained industrial expansion and discouraged long-term hiring.

Pakistan's economy saw contraction in agriculture, manufacturing, construction and trade which collectively employed over three‑quarters of the workforce.

"The employment crisis is closely intertwined with declining real incomes. Cumulative inflation in recent years has consistently outpaced wage growth, pushing real per capita household income downward," the report argued.

The report warned that rising unemployment has started affecting even engineers, doctors, IT specialists, and other trained professionals who are increasingly seeking opportunities abroad now.

This trend drains human capital, weakens productivity and reduces the economy's capacity for innovation, it said.

"Wholesale and retail trade, often a fallback for surplus labour, has also weakened as consumer demand falters. The result is an economy that grows intermittently but fails to translate output into employment at scale," it noted.

- IANS