Pakistan Has Beaten Poverty Before. It Can Do It Again

By Shahid Anwar

Pakistan has already demonstrated that poverty reduction is possible. Between 2005–06 and 2018–19, the national poverty rate fell from 50.4% to 21.9%. However, it rose again to 28.9% by 2024–25. What drove the earlier success? Why did progress reverse? And what should the government do to put Pakistan back on track?

These questions go beyond economic statistics. They concern the living standards, opportunities and future prospects of millions of Pakistanis. The country must learn from its past achievements and address the weaknesses that allowed poverty to rise again. (Pakistan Bureau of Statistics, HIES 2024–25; Pakistan Economic Survey 2025–26)

What Worked the First Time?

The most important lesson from Pakistan’s earlier progress is that poverty declined when households gained better earning opportunities.

The World Bank found that rising labour incomes outside agriculture played a major role in 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. However, they often offered better earning opportunities than reliance on traditional agriculture alone. By 2018, around three-quarters of Pakistani households received 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 local economic activity. During the first ten months of 2008–09, Pakistan received US$6.4 billion in workers’ remittances. Full-year inflows reached approximately US$7.8 billion.

Spending on housing, small businesses, goods and services helped sustain livelihoods and generate demand for workers. Social protection also played an important role. The Benazir Income Support Programme, launched in 2008, provided additional assistance to vulnerable families.

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

Pakistan’s earlier progress therefore did not result from a single government scheme or one exceptional period of economic growth. Instead, several factors worked together: rising labour incomes, non-agricultural employment, remittances, rural economic activity and social protection.

The government should recreate these conditions. This time, however, the emphasis must be on higher productivity, better wages and stronger protection against economic shocks.

Why Poverty Has Risen Again

Much of Pakistan’s earlier progress rested on an economic foundation that proved insufficiently resilient.

The COVID-19 pandemic, devastating floods in 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 contrast highlights a critical lesson: economic growth alone cannot reduce poverty when employment opportunities and purchasing power fail to keep pace. (World Bank, Pakistan Poverty and Equity Brief, October 2026)

The burden is particularly severe in rural areas. Poverty stands at 36.2% in rural communities, compared with 17.4% in urban areas.

Provincial figures also reveal substantial differences. Poverty ranges from 23.3% in Punjab to 47% in Balochistan. Sindh records a rate of 32.6%, while Khyber Pakhtunkhwa stands at 35.3%.

Children face additional challenges. According to the cited World Bank estimates, 28% of children aged 5–16 are out of school. Nearly 40% of children under five experience stunting.

Poverty therefore affects more than a family’s ability to meet its immediate needs. It also limits children’s education, health and opportunities, potentially passing disadvantage from one generation to the next. (Pakistan Bureau of Statistics, HIES 2024–25; Pakistan Economic Survey 2025–26; World Bank)

Seven Priorities for Reducing Poverty

Make Productive Employment a National Priority

Pakistan needs more jobs that provide reliable incomes and improve household living standards.

Key sectors include agriculture, agro-processing, textiles, light engineering, construction, logistics and services. Small and medium-sized enterprises must also receive easier access to finance, simpler regulations and a more predictable tax environment.

Government incentives for investment should be linked to measurable outcomes. These should include new jobs, higher productivity, worker training and export growth.

The objective must be clear: economic growth should create earning opportunities for the people who need them most.

Link Skills Training to Real Jobs

Skills programmes should respond directly to labour market demand.

The government should work with employers, contractors and businesses to identify the skills they need. Wherever possible, employers should commit to hiring successful trainees.

Self-employment programmes also require careful planning. Participants need access to viable markets for the products or services they intend to offer.

Funding should depend partly on actual job placements, employment retention and improvements in earnings. Counting certificates alone cannot demonstrate success.

Training must lead to real economic opportunities.

Increase Incomes in Rural Communities

Rural development should focus on raising the incomes of farmers and agricultural workers while creating jobs beyond traditional farming.

Small farmers need better irrigation, quality seeds, modern technology, affordable finance and reliable market access. Investment in livestock, dairy, fisheries, food processing, storage and rural transport can generate additional employment.

Provincial governments should give priority to poorer districts. They should also assess development projects by their impact on household incomes and local employment.

This approach would help rural communities build stronger local economies and reduce their dependence on limited sources of income.

Turn Social Protection into a Pathway to Economic Independence

The Benazir Income Support Programme must continue protecting vulnerable households. However, families capable of becoming economically independent should also receive support to build sustainable livelihoods.

Eligible participants could benefit from market-relevant training, productive assets, access to finance, mentoring and connections with employers and buyers.

Each participating family should have a practical plan suited to its circumstances. Follow-up support should continue for two years after the family graduates from assistance.

The government must measure how many families achieve lasting income improvements and remain above the poverty line. Simply counting beneficiaries is not enough.

At the same time, people who cannot work must continue receiving appropriate assistance and protection.

5. Protect Households Against Economic Shocks

Floods, sudden price increases and other emergencies can push vulnerable families back into poverty. Pakistan must prepare before such crises occur.

The government should maintain updated beneficiary records, establish reliable digital payment systems and develop procedures to expand assistance quickly during emergencies.

Wherever feasible, affected households should receive support within days rather than waiting for lengthy administrative processes.

Effective emergency assistance can prevent temporary setbacks from becoming long-term poverty. Protecting vulnerable families is essential to preserving earlier gains.

Invest in Education, Nutrition and Healthcare

Children need better opportunities if Pakistan is to achieve lasting poverty reduction.

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

Primary healthcare, safe drinking water and essential services also require greater attention in the poorest communities.

Women need access to finance, affordable childcare, safe workplaces and employment opportunities. These measures can improve household incomes while strengthening Pakistan’s future workforce.

Investment in children’s health and education is not merely social spending. It is an investment in the country’s long-term economic capacity.

Introduce a National Poverty Reduction Plan

Federal and provincial governments should develop a National Poverty Reduction Plan with clear, measurable targets.

The plan should establish annual goals for reducing poverty, creating productive jobs and increasing real household incomes. Authorities should publicly report progress, including the number of families that move out of poverty and remain economically secure.

Independent evaluations should identify successful interventions and redirect public funds away from programmes that fail to deliver results.

Government performance must be judged by improvements in people’s lives, not simply by the amount spent on poverty alleviation.

Pakistan Can Rebuild Its Progress

Pakistan has already demonstrated that poverty can be reduced. The decline 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 reveals the weaknesses that remain. Earlier gains cannot be sustained without productive employment, rising real incomes and stronger protection against economic shocks.

As an economic analyst, I believe the government should assess its 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? And are fewer households falling back into poverty?

These questions should guide economic decision-making and public spending.

Pakistan does not need to start from scratch. It must learn from what worked, correct what failed and make poverty reduction a measurable national priority.

The country’s past success offers a clear lesson: poverty can be reduced when economic progress translates into better earning opportunities. The government’s responsibility is to ensure that growth once again delivers higher incomes, improved living standards and a more secure future for millions of Pakistanis.

About the Author

Shahid Anwar is an Economic Analyst, Business and Trade Advisor, and Founder and Chief Executive of SAKA Business Services (SBS) and THINKNEXT, an executive knowledge platform. He previously served as Secretary General of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Senior Director of Research at the Institute of Cost and Management Accountants of Pakistan (ICMAP). He has 36 years of experience in economic, business and trade affairs.