ISLAMABAD — Pakistan unemployment rate is set to climb close to 7%, according to the latest Labour Force Survey (LFS) for 2024–25, marking a reversal from the 6.3% recorded in the 2021–22 survey. The government is expected to officially release the report next week, senior officials confirmed.

According to well-placed government sources, the fresh survey—conducted by the Pakistan Bureau of Statistics (PBS)—indicates that overall unemployment in the country has edged up to nearly 7%. Preliminary findings were recently presented during the “Data Fest” conference, although experts raised questions regarding some data inconsistencies, particularly related to the Islamabad Capital Territory (ICT) and a few sectoral classifications.

A Shift in Measurement Standards

A major reason behind the shift in unemployment numbers is Pakistan’s adoption of the 19th International Conference of Labour Statisticians (ICLS) framework, introduced by the International Labour Organization (ILO). For decades, Pakistan had relied on the 13th ICLS framework, which defined any person working even one hour in the reference week—whether for wages, profits, or family business—as “employed.” That standard had remained in use globally since 1982.

Under the old definition, even individuals involved in minimal or informal household activities were counted as part of the employed labor force, often lowering the unemployment rate artificially and overstating economic engagement.

The updated 19th ICLS methodology, adopted internationally in 2013, introduces a clearer and more realistic classification of work. It separates:

• Market Work: Activities performed for wages, profit, or production for sale;
• Own-Use Production Work:  Non-market activities, such as producing food for household consumption, keeping livestock for personal use, voluntary work, unpaid household contributions, or unpaid apprenticeships.

This categorization is targeted at answering what has been a critical question for Pakistan: who is actually participating in the labor market, and who is engaged in unpaid or subsistence activities, which do not reflect formal economic activity?

Impact on Employment, Participation, and Economic Analysis

Under the revised framework, many individuals—particularly rural women, unpaid family workers, and subsistence farmers—will no longer be counted as employed unless they are available for market work or actively seeking it.

As a result:

• Labor force participation rate will decline,
• Employment-to-population ratio will fall,
• Unemployment rate will rise, simply because definitions are more realistic and stricter.

These changes do not necessarily mean that joblessness has suddenly surged; rather, the labour force is now being counted more accurately.

Context from the 2021–22 Labour Force Survey

The previous LFS 2021–22 had reported Pakistan’s total labor force at 71.76 million, with the unemployment rate easing slightly to 6.3%. Key indicators included:

• Employment-to-population ratio: 42.1%
• Major gender gap: Male employment at 64.1% versus female at only 19.4%
• Services sector identified as the largest employer
• Youth unemployment (ages 15–24) at a high 11.1%, with young women particularly affected

These disparities are expected to become even more visible under the new classification, especially as unpaid work—often performed by women in rural households—is no longer counted as employment.

Why the Change Matters

Economists argue that adopting the 19th ICLS standard places Pakistan’s labor data on par with international norms, providing a more accurate reflection of the country’s workforce dynamics. It also allows policymakers to differentiate between:

• Individuals genuinely participating in the job market
• Those engaged in unpaid household or subsistence activities
• Those entirely outside the labor force

For planners, this clarity is crucial in designing targeted employment programs, understanding gender dynamics, and devising rural development strategies.

Concerns Raised at Data Fest

During the Data Fest presentation, some experts questioned anomalies in certain regions and industry breakdowns, urging PBS to refine its dataset before the official release. Nonetheless, officials assured that the methodological shift is consistent with global best practices.

The Road Ahead

As Pakistan prepares to publish the full LFS report for 2024–25, policymakers expect public debate over the higher unemployment figure. But experts emphasize that the rise is largely due to improved measurement—not necessarily worsening economic conditions.

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By aligning with the new ILO standard, Pakistan is stepping toward a more transparent and internationally comparable labor reporting system—one that may prompt tougher conversations, but also pave the way for more accurate policymaking and stronger job-creation strategies in the years ahead.