Fragile Gains, Enduring Challenges: Charting Pakistan’s Path Out of Poverty

The Changing Landscape of Poverty

Pakistan’s journey in poverty reduction reflects both significant achievements and ongoing challenges. The recent Poverty, Equity, and Resilience Assessment highlights that from 2001 to 2018, the country saw its poverty rate plummet from 64.3% to 21.9%, driven largely by increased labor incomes from a shift from agriculture to low-quality services like construction, trade, transport, and manufacturing. Real wages in these sectors grew modestly, and by 2018, three-quarters of households were earning some form of non-agricultural labor income.

However, this momentum has slowed since 2015. The sectors that once absorbed low-income workers and lifted many out of poverty now face constraints due to low productivity. Recent crises have added new pressures, making it harder for vulnerable households—those just above the poverty line and susceptible to shocks or unforeseen hardships— to maintain their gains. The catastrophic floods of 2022 alone pushed an additional thirteen million Pakistanis into poverty, compounding the impact of the COVID-19 pandemic and economic and political instability, which fueled inflation. In 2023/24, a projected 60.4 million people lived below the national poverty line, highlighting the importance of renewed efforts to support sustainable poverty reduction.

Unlocking Economic Opportunity: Women and Youth

Poverty is about more than income—it is about access to economic opportunities. When people, especially women and young people, can participate fully in the economy, communities thrive. In Pakistan, this has been a challenge.

In 2018, just over half of working-age Pakistanis were economically active. Even among those who work, over 85% of employment is informal, and among the poorest, it’s more than 95%. Jobs in agriculture, construction, and low-end services often offer limited wages and few chances for skill development or advancement.

Women and young people, in particular, face barriers to participation. Female labor force participation stood at a mere 25.4% in 2020, far below regional averages. Even among those who work, most women are engaged in unpaid family labor or low-value home-based work, restricted by social norms, safety concerns, and lack of childcare. Young people also face challenges, with 37% of those aged 15 to 24 not in employment, education, or training (NEET), which can make it harder for them to find stable footing in the economy.

Investing in Human Capital: Health, Nutrition, and Learning

Sustained progress depends on investing in people. Healthy, educated citizens are the foundation of long-term growth. Pakistan’s gradual improvements in human capital have not yet reached their full potential, especially for those living in poverty. Nearly 40% of children under five are stunted, and this has irreversible effects on cognitive and physical development, undermining future learning and earning potential. High rates of infant mortality and maternal malnutrition further compound early-life disadvantages.

Education outcomes also present challenges: one in four primary school-aged children are out of school, and learning poverty is high, with 78% of 10-year-olds unable to read and write a simple text. These disparities directly translate into significant wage gaps: in 2018, those with secondary education earned 45% more than those with only primary schooling. Girls, particularly in rural regions, face additional barriers, such as early marriage, high fertility, and financial dependence.

Poor public services and basic infrastructure—like unreliable schools, clinics, roads, and water systems— are at the heart of these issues. While nearly all households have access to water in some form, only half have "safely managed" drinking water, and just 17% have piped water in their homes.  These gaps are more pronounced for rural and low-income households, who also face more frequent electricity outages and limited access to clean cooking fuels.

Poverty Has a Postal Code, and Why This Matters

In Pakistan, your address profoundly shapes your access to opportunity, services, and quality of life.  National averages can mask significant differences between regions. Poverty rates range from just 3.5% in Islamabad to 76.9% in Tharparkar, while seven of the ten poorest districts are located in one province: Balochistan.

In 2023, Pakistan officially classified 61% of its population as rural, but analysis of satellite imagery reveals that 88% of Pakistanis live in places that look more like cities or towns. This means that many “rural” areas now have urban challenges but may not receive the support and services they need.

As a result, despite rapid urban growth, many cities struggle to deliver the benefits typically associated with urban life. Instead of driving progress, weak infrastructure and lack of public services have stalled development. Settlements have become denser and more commercially active, but public investment in water and sewage has not kept pace, resulting in density without development.

Pakistan stands at a pivotal moment to shape a more inclusive and equitable future. By adopting granular, spatially targeted policies and investing in public services and essential infrastructure, the country can lay the foundation for lasting progress. Enhanced land use planning and focused support for regions with untapped potential will help unlock opportunities for all, driving sustainable and inclusive growth nationwide

Charting a Way Forward: From Fragile Gains to Durable Progress

With over half of Pakistan’s 240 million people of working age, the country stands at a pivotal moment. Pakistan’s poverty story today is not just about income, but about exclusion from economic opportunities, education, health, and basic public services. The very forces that once helped reduce poverty—labor markets and mobility— now need renewed attention. The focus must shift toward better-paying, higher-productivity work, especially for women, young people, and those in rapidly growing urban areas.

Investing in people, places, and access to opportunity, particularly for lower-income communities, offers a powerful chance to unlock economic potential. Building a better-educated workforce, ensuring healthier mothers and children, and providing income support in the face of shocks not only strengthens resilience but lays the foundation for inclusive growth. These challenges are complex and interconnected, and public leaders need access to credible and smart data insights to understand what works and adjust policies quickly. With thoughtful, inclusive policies, Pakistan can reclaim momentum towards prosperity and build a future where every person has the chance to thrive.

*This story is part of the World Bank Group’s ‘End Poverty Day’ campaign on October 17, 2025.