The better half of Pakistan’s economy

As the world celebrated International Women’s Day this year, Pakistan remained at crossroads.

The founder of this nation, who proposed women working side by side with men, would have been utterly disappointed to see how far we have strayed away from his vision. Seven decades since its formation, Pakistan has managed to score the second lowest rank in the Global Gender Gap Index, standing at 146th position.

This is three steps down from last year, marking a step back in an era where women empowerment remains highly relevant. With a female population of 116 million in the fifth most populous country of the world, women only constitute a meager 23% of the workforce. These figures point towards a system that systematically excludes women from the economy.

Whilst Pakistan struggles with gender empowerment, regional counterparts have shown mixed results.

India, ranked 129th, has closed 64.1% of its gender gap in 2024, with female labour force participation at 45.9%, far above Pakistan’s 23%, but still undermined by wage gaps and low managerial representation. Bangladesh, despite being ranked at 99, has the lowest economic participation in the world at 31.1%, due to worsening income inequality and shrinking labor force participation.

In a post-pandemic world, several factors have contributed to gender equality reversals this year, particularly for Pakistan. With unemployment hitting 22% recently, many women have lost their livelihoods, taking on unpaid care-giving responsibilities, whilst enduring gender based violence.

The rising energy costs, coupled with climate change have also affected women more than men, especially in rural areas, where over a half of the female population lives.

Agriculture, which constitutes a major chunk of our economy, has more female workers than male. In fact, women make up nearly 70% of the rural workforce, owning less than 2% of land. Unfortunately, many women in rural areas are being pushed into informal, unpaid labour as farming conditions worsen.

Pakistan’s cotton crisis is a glaring example. The recent decline in cotton yields, particularly in Punjab (down by 48%), has forced the country to import $5 billion of cotton. This situation has been exacerbated by IMF-led bailouts that dictate policies, which adversely affect women, especially in rural areas.

Feminist economists have often argued that austerity measures are not neutral economic policies; they actively reinforce gendered oppression, triggering a chain reaction that forces women into unpaid labour, deepening malnutrition, and even increasing the risk of miscarriage.

IMF programmes tend to dictate policies that focus on a reduction in food subsidies, a rise in energy tariffs and decreasing interest rates that often marginalizes these women.

Under austerity measures, cuts to education, healthcare, and social welfare hurt women the most, limiting their participation in the workforce. At the same time, rising food costs due to decreased subsidies and high energy tariffs force women to prioritize their families (often large) over themselves resulting in malnutrition, widespread anemia, ultimately affecting reproduction adversely.

As Jessica Mandanda notes, “Neoliberalism banks on existing patriarchal dynamics. When governments sign IMF agreements, the first things they cut are public services and social protections — the burden of that falls onto women.” Breaking free from this cycle is imminent. Pakistan must align policies that balance women inclusion with fulfilling IMF-related covenants.

The current economic model prioritizes debt repayments and fiscal consolidation over human development, which has led to a regressive taxation system, closing credit doors for women and providing weak legal protection to women. Pakistan must focus on development of reforms that address these issues imminently.

Pakistan’s increasing reliance on indirect taxes such as VAT, sales tax, and fuel levies is of utmost concern. Although indirect taxes help fulfill revenue targets, they disproportionately affect low-income households, particularly women.

Feminist economists highlight that women spend a higher percentage of their earnings on food, utilities, and healthcare, and are more affected by indirect taxes.

Meanwhile, landowners and influential business men easily escape the tax net, increasingly reliance on indirect taxes. This, in turn, limits women’s disposable income, restricting their ability to save or invest in income-generating activities, further pushing them away from economic participation. Restructuring tax policies by promoting a system of direct taxation and closing tax loopholes would help shift the burden from the marginalized segments of our society, including women.

Access to credit for women, which is crucial for their economic empowerment, still remains a challenge in Pakistan. Currently, only 13 percent of women in Pakistan have accounts with formal financial institutions, compared to 34 percent of men.

Moreover, the share of female borrowers in the microfinance sector has declined from 54 per cent to 46 per cent between 2018 and 2024, despite women demonstrating superior repayment behavior. Although institutions like Kashf have helped a large number of women, there needs to be a state level initiative.

The Benazir Income Support Programme can perhaps also extend to other provinces and be integrated with state sponsored microfinance initiatives.

Financial inclusion cannot exist in isolation—it must be coupled with progressive taxation that reduces the burden on women and redirects resources toward inclusive economic policies. This would help women transition from outright dole payments to empowerment through entrepreneurship.

Education in rural areas remains abysmally low, making it even harder for women to enter the workforce or start businesses. A step forward would be expanding poly-technical and vocational courses for women, providing them with technical skills and financial training to help them access markets and run sustainable businesses.

The cottage industry has declined over the years, but can only be revived once all these components are meticulously looked into.

Providing women with access to credit, alongside vocational training in sectors such as textiles, handicrafts, and food processing, can help them scale their businesses and possibly help boost exports.

Pakistan’s economic future depends on ensuring women’s full participation in the workforce. Austerity measures, financial exclusion, and regressive taxation have systematically marginalized women, limiting their ability to contribute to economic growth. Without immediate and targeted inclusion efforts, Pakistan risks falling behind other nations in gender equality.

As Quaid-e-Azam Muhammad Ali Jinnah emphasized, “No struggle can ever succeed without women participating side by side with men. There are two powers in the world; one is the sword, the other is the pen.

There is a great third power stronger than both, that of the women.“ Pakistan cannot afford to keep the better half of its population economically sidelined. Economic equality is not just about fairness, it is essential for national progress and survival in the 21st century.

Copyright Business Recorder, 2025