A recent World Bank report titled “Rethinking Social Protection in South Asia: Toward Progressive Universalism” warns that climate change could push between 5.7 million and 9 million additional people into poverty in Pakistan.
Climate change is thought to be the biggest long-term and unmitigated external risk to water security in Pakistan, and it is a key reason why staple crop yields and livestock production are projected to decrease by up to 20 to 30%, respectively, according to the World Bank (WB).
The report emphasizes the impact of the devastating 2022 floods in Pakistan, which directly resulted from the country’s vulnerability to climate change. These floods left between 8.4 million and 9.1 million additional people in poverty. The situation has been exacerbated by global fuel and food crises stemming from Russia’s invasion of Ukraine.
These challenges disproportionately affect the most vulnerable populations, including women, youth, and children. South Asia faces the dual challenge of creating jobs for a rapidly growing working-age population while adapting to the disruptive effects of new technologies on the labor market.
In Pakistan, nearly half of the poor population resides in Punjab, with the poverty rate in southern Punjab at 39%, almost double the provincial average of 21%. Underemployment remains a significant issue across South Asia, with 13% of Pakistani workers earning less than the minimum wage. Additionally, the number of youth not engaged in education, employment, or training (NEET) has risen sharply, with an additional 1.6 million young people in Pakistan becoming idle.
The report highlights that Pakistan spends the most on social protection within South Asia, allocating 4.8% of its GDP, driven primarily by energy subsidies and public sector pensions. Despite this, social assistance coverage remains low, particularly among the richest quintile. On average, South Asian countries spend 1.14% of GDP on social assistance, with Pakistan and Sri Lanka at the lower end of the spectrum. Economic growth in South Asia has been uneven, with countries like Bangladesh and Bhutan achieving significant per capita GDP growth. However, Pakistan and the Maldives have struggled to sustain economic growth, averaging only 2.3% and 2.5% real per capita GDP growth, respectively, between 2000 and 2018.
Public sector pension spending as a share of GDP is highest in Pakistan at 2%, with Sri Lanka allocating almost 50% of its total social protection spending to public sector pensions. The World Bank report calls for enhanced social protection measures to mitigate the impact of climate change and support vulnerable populations in Pakistan and the broader South Asian region.