ISLAMABAD: The Intern­ational Labour Organisation (ILO) says Pakistan’s labour market has yet to recover fully from the Covid-19 pandemic and economic crisis, and the number of persons unemployed is projected to reach 5.6 million this year, an increase of 1.5m since 2021.

This estimate matches the IMF’s projected unemployment rate of 8.5 per cent in 2023, up from 6.2pc in 2021, the ILO said in its employment outlook report on Pakistan released on Thursday.

The report also highlights that the female unemployment rate, which is historically at least 1.5 times that of male rates, could reach a high of 11.1pc.

The deflated job growth and rising unemployment could push Pakistan’s progress toward decent work back by decades, the ILO warns.

ILO says labour market yet to recover from pandemic, economic crisis

According to the ILO estimates, Pakistan’s employment-to-population ratio in 2023 fell well below its pre-crisis trend line at 47.6pc, while the number of unemployed persons is expected to reach 5.6m — a surge of 1.5m since 2021.

The increasing labour market challenges reflect Pakistan’s cumulative economic distress, following from the shock of the Covid-19 crisis and 2022 floods and exacerbated by the recent macroeconomic turmoil.

Pakistan’s recent agreement with the IMF, securing a $3 billion standby arrangement (SBA) in July 2023, aims to avert a debt default and shore up investors’ confidence.

However, the SBA and the squeeze on public financing required for its implementation are likely to add further stress to labour market prospects, at least in the short term.

“Pakistan is facing a multitude of challenges that are taking a heavy toll on its labour market while driving greater informality and out-migration. The ILO, through its Fourth Decent Work Country Programme (DWCP), is dedicated to addressing the plight of workers and struggling enterprises and to finding solutions that will help to increase the security of their livelihoods through these difficult times,” said Geir Tonstol, ILO Country Director for Pakistan.

He added that the organisation would reinforce social dialogue as an instrument for social stability and develop integrated provincial-level inclusive recovery strategies for decent job creation, with a particular focus on women and youth.

The country’s employment-to-population ratio is estimated at 47.6pc in 2023, which is nearly two percentage points below the pre-crisis ratio in 2019.

Compared to a post Covid-19 no-crisis counterfactual scenario, employment numbers in 2022 are estimated at 1.8m below where it should have been. The estimated “jobs gaps” grows to 2.4m in 2023.

Coupled with the devastating floods of 2022 and the currently unfolding financial crisis, Pakistan’s economy is experiencing negative growth and inflationary pressures that enterprises and households are finding increasingly difficult to withstand.

Published in Dawn, September 15th, 2023