Pakistan stands at a demographic crossroads. Over half of its 241 million population is under the age of 19, yet the country’s industrial engine is slowing. Instead of absorbing the growing youth workforce, the economy appears to be shrinking its employment base, setting up what experts warn could be a recipe for a demographic disaster.
New data from Punjab and Sindh’s large-scale manufacturing (LSM) sectors paint a grim picture. From July 2022 to June 2024, Punjab’s LSM employment index fell from 100 to 96.3, while Sindh’s dropped even further to 95.4. This isn’t short-term volatility, it reflects a structural decline in job opportunities in two provinces that collectively represent the heart of Pakistan’s industrial economy.
The datasets cover 72% of Punjab’s LSM value-added and 84% of Sindh’s, suggesting that stagnation or decline is happening across the majority of Pakistan’s formal manufacturing base. This downturn comes at a time when the country needs to be accelerating output just to match its explosive population growth.
Manufacturing output is now lower than it was 5–7 years ago in many sectors. The conversation around premature deindustrialization is no longer speculative, it’s unfolding in real time.
While this data doesn’t include smaller-scale industries or informal sectors like construction, retail, and wholesale, which also employ millions, it’s a key indicator of economic health. LSM’s steady decline points to a shrinking output gap and underutilized economic potential.
Worse still, in Pakistan, job data rarely receives the same attention as GDP or inflation. Yet employment is the linchpin of economic productivity and social stability. Without robust job creation, the nation’s growing youth population faces the grim prospects of chronic underemployment, wasted potential, and rising social tension.
Policymakers, educators, and industrial leaders must urgently collaborate to align skill development with actual labor market demands. Without this coordination, Pakistan’s greatest demographic strength may turn into its most pressing liability.
