Pakistan has beaten poverty before. It can do it again

October 19, 2026 (MLN): Pakistan has already shown that poverty can be cut by more than half. Between 2005–06 and 2018–19, the national poverty rate fell from 50.4% to 21.9%. Yet, by 2024–25, it had climbed back to 28.9%. Why did we succeed before, what went wrong, and what must the government do to repeat that success?

These are not merely questions about economic statistics. They concern the living standards and future prospects of millions of Pakistanis. (Pakistan Bureau of Statistics, HIES 2024–25; Pakistan Economic Survey 2025–26)

What explains our earlier success? The most important lesson is that poverty declined when household earning opportunities expanded. The World Bank’s analysis found that rising labour incomes outside agriculture were a principal driver of poverty reduction during the earlier period.

As workers moved into construction, trade, transport, manufacturing and services, their families gained additional sources of income.

These jobs were not always formal or highly paid, but they often offered better earning opportunities than dependence on traditional agriculture alone. By 2018, around three quarters of Pakistani households were receiving some form of non-agricultural labour income. (World Bank, Pakistan Poverty, Equity and Resilience Assessment, September 2025)

Remittances from overseas Pakistanis also supported household consumption and stimulated local economic activity. Pakistan received US$6.4 billion in workers’ remittances during the first ten months of 2008–09, while full year inflows reached approximately US$7.8 billion. Spending on housing, small businesses, goods and services helped sustain livelihoods and create demand for workers.

Social protection, particularly the Benazir Income Support Programme launched in 2008, provided additional support to vulnerable families.

Higher wheat support prices and government procurement also injected cash into parts of the rural economy, although their benefits varied between farmers and food consumers. (Pakistan Economic Survey 2009–10; Finance Division, Year Book 2008–09)

Our earlier progress was therefore not the result of one government scheme or a single period of exceptional growth. It reflected several developments working together: rising labour incomes, non-agricultural employment, remittances, rural economic activity and social protection.

The government should now recreate these conditions, but with greater emphasis on productivity, better wages and resilience against economic shocks.

Unfortunately, much of this progress was not built on a sufficiently strong economic foundation. COVID-19, the devastating floods of 2022, high inflation and economic instability placed additional pressure on household budgets.

The World Bank reports that real wages declined by an average of 3.4% annually between 2018–19 and 2024–25. GDP per capita grew by an average of around 0.9% annually over the same period, yet poverty increased.

This shows that economic growth alone is not enough when employment opportunities and purchasing power fail to keep pace. (World Bank, Pakistan Poverty and Equity Brief, October 2026)

The problem is particularly serious in rural areas, where poverty stands at 36.2%, compared with 17.4% in urban areas. Provincial rates range from 23.3% in Punjab to 47% in Balochistan, with Sindh at 32.6% and Khyber Pakhtunkhwa at 35.3%.

Meanwhile, 28% of children aged 5–16 are out of school, and nearly 40% of children under five suffer from stunting, according to World Bank estimates.

Poverty therefore affects not only the ability of families to meet their needs today, but also the opportunities available to the next generation. (Pakistan Bureau of Statistics, HIES 2024–25; Pakistan Economic Survey 2025–26; World Bank)

What should the government do to reduce poverty?

First, make productive employment and rising real incomes the central objectives of economic policy. Pakistan needs more jobs in agriculture, agro-processing, textiles, light engineering, construction, logistics and services. Small and medium enterprises should receive easier access to finance, simpler regulations and a more predictable tax environment.

Government incentives for investment should be linked to measurable outcomes, including additional jobs, productivity, worker training and exports. The objective should be to ensure that economic growth creates earning opportunities for people who need them most.

Second, connect skills training directly with employment and market demand. Publicly funded training programmes should be developed with employers, contractors and businesses that need workers.

Wherever possible, employers should commit to hiring successful trainees, while programmes supporting self-employment should demonstrate that there is a viable market for the proposed products or services.

Funding should depend partly on actual job placement, job retention and improvements in earnings, rather than simply the number of certificates issued. Training must lead somewhere.

Third, rural development should focus on increasing the income earned by farmers and rural workers. Small farmers need better irrigation, quality seeds, modern technology, affordable finance and access to markets.

Investment in livestock, dairy, fisheries, food processing, storage and rural transport can create additional employment beyond traditional farming.

Provincial governments should prioritize poorer districts and assess development projects according to their contribution to household incomes and local employment.

Fourth, social protection should provide a pathway towards economic independence for families capable of working. The Benazir Income Support Programme must continue protecting vulnerable households.

However, eligible families that can become self-reliant should also be offered market relevant training, productive assets, access to finance, mentoring and links with employers and buyers.

Each participating family should have a practical plan suited to its circumstances, with follow up support for two years after graduating from assistance.

The government should measure how many families achieve sustained improvements in earnings and remain above the poverty line, rather than merely counting beneficiaries. People unable to work must continue to receive appropriate support.

Fifth, prepare for economic shocks before they occur. Floods, sharp price increases and other emergencies can push vulnerable households back into poverty.

The government should maintain updated beneficiary records, establish tested digital payment arrangements and prepare procedures for rapidly expanding assistance when a crisis occurs.

Help should reach affected families within days wherever feasible, rather than being delayed by administrative processes. Protecting households against shocks is essential if earlier poverty reduction gains are to be sustained.

Sixth, invest in children, education, nutrition and healthcare. Targeted stipends can help keep girls in school, particularly in disadvantaged rural districts. Nutrition programmes should prioritize pregnant women, mothers and infants during the first 1,000 days of life, when adequate nutrition is especially important for physical and cognitive development.

Primary healthcare, safe drinking water and better access to essential services should receive particular attention in the poorest communities.

Women also need access to finance, affordable childcare, safe workplaces and employment opportunities. These investments will improve living standards today and strengthen Pakistan’s future workforce.

Finally, the federal and provincial governments should introduce a National Poverty Reduction Plan with Measurable Targets, setting annual goals for reducing poverty, creating productive jobs and increasing real household incomes.

Progress should be reported publicly, including how many families move out of poverty and remain economically secure. Independent evaluations should identify successful interventions and redirect public money away from programmes that fail to deliver results.

The emphasis must be on measurable improvements in people’s lives, not simply the amount of money spent on poverty alleviation.

Pakistan has already demonstrated that poverty can be reduced. The fall from 50.4% in 2005–06 to 21.9% in 2018–19 shows what expanding earning opportunities, remittances, rural economic activity and social protection can achieve.

The subsequent reversal demonstrates that these gains cannot be sustained without productive employment, rising real incomes and better protection against economic shocks.

As an Economic Analyst, I believe the government should assess its economic policies by their impact on ordinary families. Are workers earning more in real terms? Are farmers receiving better returns? Are small businesses creating jobs? Can families afford food, housing, education and healthcare? Are fewer households falling back into poverty?

Pakistan does not need to start from scratch. It needs to learn from what worked, correct what failed and make poverty reduction a measurable national priority. Our past success shows that poverty can be reduced.

The government’s responsibility is to ensure that economic growth once again translates into better incomes, improved living standards and a more secure future for millions of Pakistanis.

 About Author:

The writer, Shahid Anwar, is an  Economic Analyst and former Secretary General of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

He also served as Senior Director Research at the Institute of Cost and Management Accountants of Pakistan (ICMAP), with 36 years of experience in business, trade and economic affairs. He provides advisory support on trade, investment and business partnerships.

Disclaimer:

The above analysis/article is for informational and educational purposes only.

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