THE evidence is piling up that without a dramatic change of course the economy will sink deeper into a quagmire that takes us all to a very bad place. The latest in the parade of grim numbers is a revelation by the Planning Commission that the number of people living below the poverty line has surged since 2018.
Since 2001, these numbers had been declining, sometimes slowly, other times rapidly. But for the first time in nearly a quarter century, we have seen them rise, from 21.9 per cent of the population living below the poverty to 28.8pc today.
A few months ago, another revelation came from the World Bank that Pakistan’s economy was no longer lifting people out of poverty, even when it grew. Successive growth spurts generated fewer jobs, lifted fewer people out of poverty and on the whole promoted greater inequality rather than sharing the fruits of growth more equitably.
Corporate profitability spiked rapidly during this period, although much of that was also just inflation-driven, meaning inflation was being priced into corporate cash flows. But one thing that did not adjust to inflation was wages and incomes, which declined or remained flat (at best) in real terms during this period.
The economy has been sinking into this quagmire for many years now and this parade of dismal data that has been coming out for months is only telling us that the industrial structure we now have is no longer capable of carrying the country into the future. It is not competitive on the global market and cannot fetch exports in the volumes required to meet its own import requirements.
This is one important reason why the country’s foreign exchange reserves deplete every time its economy grows. The same system cannot generate incomes in quantities sufficient to produce a market for its own goods, which is one of the top reasons why its investments cluster around those sectors where large state-sponsored rents are to be had.
It cannot produce jobs in quantities sufficient to lower the unemployment rate in any meaningful sense, which is one reason why wages and incomes remain subdued even as corporate cash flows recover following bouts of severe inflation, and why the informal sector is the large job-creating engine in the country.
If Pakistan’s industrial system cannot lift wages and incomes, does not lift people out of poverty even when it is growing, cannot create jobs or export proceeds, then what use is it? There is only one reason why we continue carrying this dismal situation along with us without any attempts at change: it is working for those whom it is supposed to serve, not the rest of us.
We pay for their failures, and they give themselves pay raises instead. In truth, the system is working just fine.
The rest of us are being crushed under the weight of these dysfunctions, because it is us who have to ultimately pay the bills. First the bills come in the form of an inflation tax. Your real household income has most likely declined in the past decade, and if it hasn’t, then te salute. On top of that, your tax burden has increased massively, your utility bills have more than doubled (mine have tripled since 2015), while your food and fuel expenditures have also doubled or tripled. If you’re feeling beleaguered under the weight of growing expenses, take heart. You’re not alone. With rare exceptions, everyone in the country is going through this as we count up all that has survived in the wake of the most ferocious inflationary fire our country has ever seen. The degradation in living standards is near ubiquitous.
I say ‘near ubiquitous’ because there are the lucky few who have compensated themselves. In the same period as the rest of the country was sinking below the poverty line, our civil servants gave themselves enough pay raises in various forms to keep their own heads above water. There were ad hoc relief allowances in the budgets of FY24 and FY25 of 30pc and 20pc respectively, coupled with a transport monetisation increase of 20-25pc for senior officers to compensate for the fuel price hike.
In November 2024, our judges of the Supreme Court received a 171pc increase in salary and a 400pc increase in their house rent allowance, while high court judges received a 218pc increase in salary and the same increase in their house rent allowance. Examples of the ways in which servants of the state and servants of the people compensated themselves generously for the loss of income caused by the inflationary fire of 2022 and 2023 are endless.
Now comes news that the chief minister of Punjab has decided to purchase for herself a luxury private jet. And other senior civil servants in her province received entitlements for super luxury vehicles, along with 800 litres of fuel allowance. All this while the state is struggling to meet its external debt obligations, and lecturing those who invested in solar net metering that they are ‘elites’ with no thought for the poor.
This is where we stand today: a country bankrupted, a people impoverished, a middle class consuming its savings to survive, and a state elite oblivious to the burden they place on the people they pretend to rule. This never ends. People need to know this. It will never end because so long as they can keep offloading the costs of their failures onto us — the common citizenry — they will do so, and they will have no reason to change.
We pay for their failures, and they give themselves pay raises instead. In truth, the system is working just fine. It’s supposed to deliver outsize profits to the billionaires and an outsize living to the servants of the state. Confucius once said, ‘If you pay peanuts, monkeys will work for you’, but in Pakistan, it is us who work for the peanuts while the monkeys feast at the table. Welcome to the future. It’s yours and mine alone, dear reader, to rue and endure together.
The writer is a business and economy journalist.
Published in Dawn, February 26th, 2026
