Wages Rise 62% in 4 Years but Inflation Erodes Gains

According to the Pakistan Bureau of Statistics (PBS) Labour Force Survey (LFS) 2024–25, average monthly wages across Pakistan rose by approximately 62% over the preceding four-year period, climbing from Rs24,028 in LFS 2020–21 to Rs39,042 in 2024–25.

This nominal increase, however, occurred against a backdrop of persistently high inflation, including a peak of over 29% in FY2021–22, followed by elevated rates in subsequent years, prompting scrutiny over whether the wage gains have translated into meaningful improvements in real purchasing power and living standards.

Sectoral disaggregation reveals divergent trends: formal-sector average monthly earnings advanced from Rs34,964 to Rs54,038 (a 54.5% rise), whereas informal-sector wages—which constitute the livelihood of the majority of the workforce—grew from Rs17,529 to Rs30,834.

The PBS applied standard statistical methodologies in compiling the survey results but disclosed an approximate margin of error of 5%, with the caveat that estimates for the informal sector may carry higher uncertainty owing to inherent survey challenges and data collection constraints.

Provincial averages indicate Balochistan at the highest level (Rs27,659 per month), followed by Sindh (Rs24,664), Khyber Pakhtunkhwa (Rs24,028), and Punjab (Rs23,367). Certain observers have questioned whether these provincial rankings accurately capture underlying wage patterns or are influenced by sample composition and regional economic structures.

Inflation dynamics during the period included an average of 8.9% in FY2020–21, surging to 29.18% in FY2021–22, moderating to 23.41% in FY2023–24, and declining sharply to 4.49% in FY2024–25. Cumulative price increases over the four years have substantially eroded real wage gains, particularly for low- and middle-income households whose consumption baskets are heavily weighted toward food, energy, and transportation.

Analysts further observe that a component of formal-sector wage growth derives from periodic salary adjustments for government civilian and military personnel—representing roughly 7% of total employment and financed through federal budgetary allocations.

Economists stress that while nominal wages have shown appreciable upward movement, a robust evaluation of actual improvements in household welfare and purchasing power necessitates inflation-adjusted (real) wage analysis to ascertain whether living standards have genuinely advanced over the reference period.