The State Bank of Pakistan (SBP) held the policy rate at 11 per cent on July 30. While slowing inflation and forex reserves recovery have given Pakistan the room to breathe, the central bank remains conservative as it seems aware that global and domestic uncertainties could quickly disrupt this fragile balance. A steady hand, rather than bold moves, currently defines the SBP’s approach.

With the SBP now in a pause mode, the question is whether credit uptake, private investment, and industrial output will gain meaningful momentum.

Despite signs of modest recovery in exports, remittances and lately in manufacturing, the past two years have largely delivered jobless growth.

One key reason is the conditionality-laden International Monetary Fund programme. While essential for macroeconomic stability and restoring fiscal discipline, it has also required cuts in public spending, hikes in energy tariffs, and a tight monetary stance — policies that dampen aggregate demand and discourage labour-intensive investment. As a result, small and medium enterprises, retail sectors, and informal job markets — Pakistan’s real employment engines — have struggled to recover.

Beneath the surface of much talked about ‘macroeconomic recalibration’ lies a deeper, troubling truth: the fruits of this so-called recovery have not reached the working class

Beneath the surface of much talked about “macroeconomic recalibration” lies a deeper, troubling truth: the fruits of this so-called recovery have not reached the working class.

While the SBP’s cautious optimism and improved economic indicators signal stability to international lenders and market watchers, the average Pakistani worker remains trapped in a cycle of low wages, job insecurity, and eroding labour protections. This divergence between headline stability and street-level struggle exposes a core failing of Pakistan’s growth model — it may balance books, but it breaks backs.

The monetary policy may be stabilising inflation and attracting capital, but it has done little to address the structural inequities that keep millions precariously employed or entirely excluded from formal economic life.

The much-touted gig economy in Pakistan represents not progress but a contemporary manifestation of Marx’s “reserve army of labour” — a disposable workforce stripped of collective bargaining power. Pakistan’s freelance sector (measured by foreign exchange earned) grew by 33pc in nine months of the last fiscal year.

Yet this apparent success masks systemic exploitation, with platform workers classified as “independent contractors” to deny them basic labour rights and social protections. The estimated number of freelancers is somewhere between two million and 2.5m, and half a million of them are engaged in full time work.

Food delivery riders for platforms like FoodPanda and Careem exemplify Marx’s concept of alienation from the labour process. A damning 2023 Fairwork Pakistan report scored major gig platforms 0-1 out of 10 on fair pay metrics, with widespread protests erupting over arbitrary commission cuts. These nominally “self-employed” workers remain completely dependent on opaque algorithms that dictate their earnings while platforms avoid employer responsibilities — a digital-age echo of feudal exploitation.

This digital precarity exists within Pakistan’s broader informal economy, which absorbs 72% of the non-agricultural workforce according to the 2020-21 findings of the Pakistan Bureau of Statistics. From Sialkot’s football stitchers earning Rs18-20 per ball (retailed internationally for over $100) to home-based garment workers unaware of where their products are sold, workers also experience the second form of alienation —disconnection from the fruits of their Labour.

Alarmingly, proposed labour law revisions in Sindh and Punjab seek to institutionalise third-party contracting, further eroding worker protections, according to credible media reports.

The collapse of collective bargaining leaves workers defenceless. Pakistan’s unionisation rate has plummeted to just 2-3% of the workforce, with gig workers entirely excluded from labour protections, as per the 2023 report of Pakistan Institute of Labour Education & Research (Piler).

Pakistani gig workers rely for support only on scattered social media campaigns. Overall, labour plights are now highlighted occasionally at labour lobby forums and the Human Rights Commission of Pakistan, but to no avail. The 2025 May Day rallies organised by the Pakistan Trade Union Defence Campaign demanding an end to outsourcing and IMF-driven austerity were met with police batons rather than policy changes, according to a Dawn report.

The exploitation extends beyond gig work. Karachi’s sanitation workers earn Rs25,000 monthly — 33pc below the federal minimum wage — while often walking 20km daily to avoid transport costs, a 2023 HRCP report lamented.

The Sindh Solid Waste Management Board systematically underpays 20,000 workers by Rs17,000 each monthly, amounting to Rs2.4 billion in annual wage theft, a fact highlighted multiple times by credible mainstream media. Contract workers face instant termination for complaints and female house maids have nowhere to turn to in case of exploitation and even harassment.

Textile workers face parallel indignities. Home-based women stitchers earn Rs2-4 per piece, never knowing which international brand will sell their work, highlights Labour Behind the Label’s 2023 report. Factories routinely violate labour laws — 95pc ignore minimum wage rules, deny maternity leave, and fire pregnant workers, according to the 2023 Piler report.

State policy exacerbates this crisis. While granting tax amnesties and energy subsidies to industrial elites, the government slashes social spending under the IMF diktats.

Public sector enterprises continue to book hundreds of billions of rupees in losses every year, while education and health get paltry budget allocations. The HRCP calculates a family of six needs Rs75,000 monthly for basic dignity, but its demand to fix minimum wage at this level falls on deaf ears, while tens of billions of rupees are spent every year for the purchase of SUVs for political VVIPs and senior government officials.

Even digital freelancing, hailed as Pakistan’s economic future, replicates these inequities. While 2m freelancers generate more than $400 million annually, they face payment delays, arbitrary platform bans, and exclusion from global payment systems. Without regulation of platforms like Fiverr and Upwork, workers remain at the mercy of opaque algorithms.

The solution requires dismantling this extractive system. Immediate steps include enforcing the ICT Platform Workers Bill in letter and spirit, criminalising wage theft, and abolishing exploitative contracting. Worker cooperatives in the textiles and agriculture sectors could democratise production, while public campaigns must reframe labour as value creation rather than cost.

Published in Dawn, The Business and Finance Weekly, August 4th, 2025