Income inequality, poverty continues to rise in Pakistan

Income inequality is worsening in Pakistan every passing year even as the rate of poverty showed a sharp rise in 2023. According to the World Bank, the poverty headcount is estimated to have increased by 5 percent to 39.4 percent in 2023 from 34.2 percent in 2022.[1]  At the same time, country’s wealth continued to consolidate in hands of just a few.

Shahid Javed Burki, who worked as vice president of the World Bank and finance minister of Pakistan, said the country’s situation keeps deteriorating. “Pakistan performs poorly compared to other South Asian nations. The average income for the richest is more than 16 times the average for the poorest.”.[2]

A United Nations Development Programme (UNDP) report showed that just 22 families had control over 66 percent of Pakistan’s industrial assets, while the richest 20 percent consume seven times more than the poorest 20 percent.[3] This is a major reflection of how significant income inequality is Pakistan in.       

Limited access to healthcare and education exacerbated the income inequality in Pakistan. According to the 2021 World Inequality Database, the top 10 percent of Pakistan households earned 43.9 percent of the total country’s income. On the other hand, the bottom 50 percent of the population could earn just 15.7 percent which was equal to the total earning of just the top one percent.[4]      

Income inequality has become a persistent problem in Pakistan. The concentration of wealth with a few elites caused the economic distribution gap to increase, said Pakistani columnist Zamur Hafeez. “This concentration of wealth has given rise to substantial inequalities among different social groupings, exacerbating the economic divide,” he said.[5]

Academician and author Syed Mohammad Ali said income inequality in Pakistan is caused by influenced by ethnic, religious, and gender identities. “Women also face the brunt of poverty more than men, so inequality also has a gender dimension,” said Ali, who is a faculty at John Hopkins University.[6]

Pakistan ranked 145th out of 146 countries on the World Economic Forum’s 2022 Global Gender Gap Index.[7] Hafeez said “With a 13 percent gender disparity in the overall education system, women are disproportionately affected, limiting their potential contribution to the workforce and perpetuating economic inequality.”[8]

Burki said Pakistan lacked a policy that was needed to improve income distribution. “Despite the role of inequality in influencing the economy, life chances, and poverty, a government policy focus on, and prioritisation of, poverty alleviation alone is both inadequate for true development, and masks the true extent of income/wealth inequality in Pakistan,” he said.[9]

UNDP said a range of economic, social and political factors were responsible for income inequality in Pakistan.[10] A few years ago, a Pakistani parliamentarian named Sardar Mohammad Yaqoob Khan Nasar said “The poor are born to serve the rich. This is a system created by God, and He has made some people rich and others poor, and we should not interfere in this system.”[11]

The 2023 Macro Poverty Index report prepared by the World Bank anticipated income inequality in Pakistan to increase as an inequality indicator ‘Gini Index’ has increased from 29.6 in 2022 to 30.7 in 2023. “Overall, the economic contraction, high inflation, and flood-related devastation affected poorer households disproportionately, leading to greater inequality,” reads the report.[12]

According to the latest report of the World Bank, over 40 percent of the Pakistani population was living below the poverty line.[13]  Tobias Haque, a lead economist with the World Bank, expressed concerns over serious economic and human development crises in Pakistan. “Pakistan’s economic model is no longer reducing poverty and the living standards have fallen behind peer countries,” he said.[14]

Islamabad-based policy expert Javed Hassan slammed Pakistani elites for the widening inequality, which now posed threats to the country’s economic stability. “Despite growing inequality, powerful groups continue to leverage their unequal wealth to reinforce political influence. Pakistan’s economy is facing a precarious state due to extractive policies that favour a privileged few,” he said.    

Hassan also took a dig at the policymakers for creating high levels of inequality. “Policymaking is designed to protect the rent-seeking advantage of the rich through preferential treatment in laws, rules, and regulations,” he said.[15]  
















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