Poverty reduction stalls despite growth

Pakistan’s progress in reducing poverty has stalled after nearly two decades of steady gains, experts warned at the Fifth Annual Conference of the School of Economics and Social Sciences (SESS), Institute of Business Administration (IBA), held on November 13-14, 2025, themed ‘A New Global Order, Yet A’.

During a panel titled “Pakistan at a Crossroads: Poverty, Development and Global Shift,” economists, policymakers and development experts discussed the World Bank’s first comprehensive Poverty Assessment Report in twenty years. The report shows that while Pakistan made remarkable progress between 2001 and 2015 – reducing poverty from 64.3% to 21.9% – these gains have been delayed or reversed since 2018-19 due to overlapping economic, political and environmental shocks.

The study attributes the past success mainly to the shift from agricultural to non-agricultural income due to labor migration to the service and non-manufacturing sectors. Almost 57% of the poverty reduction came from non-agricultural labor income. But this transition has now reached its limits. Most of the new jobs are low-wage and low-productivity, concentrated in informal retail trade and services that cannot relieve households of vulnerability.

Remittances, once a critical poverty line, are also losing impact. Although they are still vital to the currency, their benefits are uneven. The poorest 20% of households rarely send workers abroad and rely on domestic migration to cities. Adjusted for inflation, real remittances decline, reducing the resilience of poor households to shocks. Experts noted that Pakistan’s labor market remains highly informal—about 85 percent of employment offers no social protection. Almost half the population is out of the labor force, while female participation stagnates at 25%, largely in low-paid agricultural work. Even more worryingly, 37% of young people are neither in education, employment nor training, the highest proportion of NEETs in South Asia.

Panelists warned that such fragility leaves millions hovering just above the poverty line. “A single shock, whether inflation, illness or job loss, can push entire families back into poverty,” said Maria Kazi of the World Bank. Access to public services is also weak: only 4.3% of households have daily access to piped water, revealing deep structural flaws in human development.

Fiscal and political challenges dominated much of the discussion. Wasif Ali Memon, Chairman, Sindh Board of Revenue, called for progressive taxation and decentralized revenue collection. “Pakistan’s fiscal structure is highly dependent on indirect taxes and the informal economy which constitutes nearly 80% of the GDP,” he said. “We need to broaden the tax base, increase the tax-to-GDP ratio and strengthen institutional capacity to sustainably finance poverty reduction.”

Christina Wieser, Senior Economist at the World Bank, urged policymakers to move beyond short-term cash transfer programs such as the Benazir Income Support Program (BISP). “BISP alleviates the poorest households,” she said, “but sustainable poverty reduction needs gender-inclusive jobs, education and economic opportunities.” Economist and journalist Khurrum Husain noted that Pakistan’s growth has been disconnected from the effects of poverty. “We’ve seen poverty stagnate even in the growth years,” he said. “Our growth is consumption-based and informal – it doesn’t create sustainable livelihoods. The rich pay less and earn more.” Without redistributive reform, he warned, inequality will widen further.

Economist Asad Syed described Pakistan’s economic model as “dependent on geopolitical rents rather than productive investment”. He said the country’s investment rate, at just 2% of GDP, is much lower than its regional counterparts. “We need to move from profiteering to a productive, equitable development model,” he urged, warning that reliance on foreign rents and neoliberal policies deepens inequality. The final session of the conference, “What’s New in the New World Order?” shifted focus to global dynamics. Neelum Nigar of the Ministry of Finance said the world was now “multipolar, fragmented and interdependent” and urged developing nations to reassess their place in global governance. “The question is not just who participates,” he said, “but who benefits.”