Economic Survey raises concerns over Pakistan’s demographic dividend

ISLAMABAD: Pakistan’s latest Economic Survey has highlighted a widening gap between the country’s large youth population and the level of investment in education, health and jobs needed to convert that demographic profile into economic gains.

Pakistan’s population has reached 252 million and is expanding at 2.07 per cent a year. Of the total, 56.9 per cent falls within the working-age bracket, while 26.6 per cent comprises youth aged 15 to 29, figures that define the country’s demographic potential.

Earlier estimates had placed the closing of Pakistan’s demographic dividend window around 2045, but the slower pace of fertility decline has now extended that timeline to roughly 2055. This also means a larger dependent population for longer and greater pressure on already stretched public services.

Education indicators remain weak

39.5 per cent of the population is under 15 years of age, keeping the base of the population pyramid heavy. Pakistan’s Human Development Index ranking is 168, while expected years of schooling stand at 7.9 years and mean years of schooling at 4.3 years.

Literacy among people aged 10 and above stands at 63 per cent, including 54 per cent for women. In rural Balochistan, female literacy is reported at 25 per cent. The survey figures also show that 28 per cent of school-age children are out of school nationwide, including 45 per cent in Balochistan.

The net enrolment rate at the primary level is 54 per cent nationally, dropping to 23 per cent at middle level and 16 per cent at matric. For girls in Balochistan, matric enrolment stands at 3 per cent.

Only 15 per cent of Balochistan’s primary schools have electricity, while toilet availability at primary schools in the province stands at 0.3 per cent.

Education expenditure declined to 0.8 per cent of GDP in FY2025, down from a range of 1.5 per cent to 1.9 per cent in previous years listed in the same table. Additional survey data showed education spending stood at Rs962 billion in 2025, compared to Rs1,251.06bn a year earlier. Out-of-school children declined from 38 per cent in 2023 to 28 per cent in 2025, with Balochistan improving from 69 per cent to 45 per cent.

Health gains but regional gap persists

Life expectancy improved from 66.5 years to 67.8 years, while infant mortality fell from 60 to 47 per 1,000 live births. Even with that improvement, Pakistan’s infant mortality rate remains above the South Asian average of 23.2 per 1,000 live births, while life expectancy is nearly five years below the regional average.

Public health expenditure stands at 0.8 per cent of GDP, the same share as education, taking combined public spending on the two sectors to 1.6 per cent of national income.

Nutrition indicators show that stunting among children under five is 33.6 per cent, compared with a South Asian average of 31.5 per cent. Undernourishment affects 16.5 per cent of the population, against a regional average of 11.7 per cent.

Between 2018-19 and 2024-25, per capita consumption of pulses, meat and milk declined, while vegetable ghee consumption increased.

Employment data shows mixed picture

The employed labour force increased from 67.25 million in 2020-21 to 77.2 million in 2024-25, an increase of nearly 10 million. At the same time, the number of unemployed people rose from 4.51 million to 5.9 million, while the unemployment rate increased from 6.3 per cent to 7.1 per cent.

The survey’s chapters on education, health, population and labour should be read together when assessing whether Pakistan is positioned to benefit from its age structure. The data points to continuing shortfalls in human capital development despite signs of macroeconomic stabilisation highlighted in the survey’s foreword, including GDP growth of 3.7 per cent, a primary surplus and foreign exchange reserves at a multi-year high.