The economic time bomb ticking louder than ever

Pakistan’s youth crisis

Pakistan is sitting on a demographic volatile situation. With over 60 percent of its 240 million population under the age of 30, the country possesses one of the largest youth bulges in the world. In theory, this should be a powerful demographic dividend. In practice, it is rapidly turning into a demographic disaster.

The numbers are stark. According to the latest Labour Force Survey, youth unemployment hovers between eight and 11 percent officially, but when underemployment and discouraged workers are factored in, the real figure is significantly higher. More than four million young Pakistanis are without jobs, while millions more are stuck in low-productivity, informal work that offers little security or future prospects. The World Bank estimates that Pakistan needs to create at least two million new jobs every year just to absorb new entrants into the labour market. We are falling dangerously short.

This is not merely a social problem. It is a profound economic crisis. Idle or underutilized youth represent lost productivity, forgone tax revenue, increased pressure on social safety nets, and rising inequality. A young person who remains unemployed for several years suffers long-term “scarring”, lower lifetime earnings, eroded skills, and diminished confidence. The IMF has repeatedly warned that failure to harness this youth bulge could cost Pakistan several percentage points of GDP growth over the coming decade.

The roots of this crisis are structural and well-known. Our education system remains largely misaligned with the demands of a modern economy. Technical and vocational training is underdeveloped and poorly funded. The formal private sector is not expanding fast enough to absorb the millions of graduates entering the job market each year. Female labour force participation remains abysmally low at around 22 percent despite women making up nearly half the youth population. Energy shortages, bureaucratic hurdles for startups, and political instability further compound the problem.

The budget this year will be judged not by how many trillions it allocates on paper, but by whether it begins to address the single most important question facing Pakistan today: will we invest in our young people and reap a demographic dividend, or will we continue with business as usual and face a demographic disaster?

The federal budget offered a critical opportunity to confront this challenge head-on. Allocating substantial resources to skill development, youth entrepreneurship funds, women’s economic empowerment programmes, and labour-intensive industries could have sent a powerful message that the government recognizes the urgency. Tax incentives for companies hiring fresh graduates, special economic zones focused on employment generation, and targeted support for small and medium enterprises could have begun to shift the needle. However, the budget was not oriented in this direction.

Countries like South Korea, Vietnam, and Bangladesh have shown that large youth populations can be transformed into engines of growth through deliberate, sustained policy choices. Pakistan has the land, the labour, and the entrepreneurial spirit. What it needs is the political will and strategic vision to turn its demographic reality into a genuine advantage.

The youth of Pakistan are not asking for charity. They are asking for opportunity. They want an economy that values their talent, respects their aspirations, and rewards their hard work. Giving them that opportunity is not just morally right, it is economically essential for the country’s future.

The budget this year will be judged not by how many trillions it allocates on paper, but by whether it begins to address the single most important question facing Pakistan today: will we invest in our young people and reap a demographic dividend, or will we continue with business as usual and face a demographic disaster?

The choice is ours. The time to make it is now.