Income Inequality in Pakistan: Top 10% of Pakistanis Earn 42% of Country’s Income, Bottom 50% Earn Only 13%

Islamabad, April 18: Inequality in wealth distribution has been a persistent problem in Pakistan, with a small percentage of the population owning a disproportionate amount of wealth, reported Business Recorder.

According to a World Inequality Database report, the top 10 per cent of Pakistani households earn 42 per cent of the country's income, while the bottom 50 per cent earn only 13 per cent. This means that the wealthiest households in Pakistan earn more than three times the income of the poorest households. Pakistan Economic Crisis: World Bank Estimates Decline in GDP Per Capita Income to USD 1,399.

This disparity in wealth distribution has wide-reaching consequences for the country's economic and social development. With the current tsunami of inflation and low growth these figures are bound to aggravate further, reported Business Recorder. Pakistan PM Shehbaz Sharif Announces New Relief Package for Low-Income Segment.

To put it into perspective the richest earn sixteen times more than the average income of the poorest. The country's Gini coefficient, which is a measure of income inequality where zero represents perfect equality and one indicates perfect disparity, was 0.334 in 2018, according to the World Bank. This is greater than the lower-middle-income country average of 0.313, reported Business Recorder.

One key factor is the concentration of wealth in the hands of a small elite that has profited from economic progress. This has resulted in large income and wealth discrepancies amongst social groupings.

Those living in poverty often lack access to basic services such as healthcare and education, leading to a cycle of poverty that is difficult to break.

Inequality is further exacerbated by limited access to education and healthcare. This has resulted in considerable variations in outcomes across areas and social groupings. In Pakistan, the poorest people frequently lack access to essential amenities such as clean water, sanitation, and power, reported Business Recorder.

Furthermore, there are major gender differences in Pakistan, with women frequently encountering discrimination and limited educational and employment prospects. As a result, there is a considerable gender pay gap, with women earning less than males for doing the same jobs.

Furthermore, as those at the bottom of the income distribution become increasingly frustrated with their lack of opportunity and influence, inequality can lead to social and political unrest, reported Business Recorder.

This can lead to increased crime, political instability, and social unrest, all of which can have negative consequences for the country's economic growth and development.

Why has Pakistan fallen so far behind the rest of South Asia? The question has a long answer but the one that is the most obvious is the absence of public policy aimed at improving income distribution.

Pakistan should implement a more progressive tax system in which higher-income people pay a larger proportion of their income in taxes. This would raise government revenue and aid in funding social services and infrastructure development that assist low-income people, reported Business Recorder.

To address inequality, a multifaceted approach is required, one of the elements is to provide education to the poor, which should be of suitable quality. This needs better funding for the public schools but currently, our spending on education is abysmally low.

Moreover, inequality in Pakistan has increased exponentially because of the untargeted subsidies; these have broken the financial system and diverted the resources that were meant for the poor to the rich instead, reported Business Recorder.

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