Poverty alleviation: what really makes a difference?

Poverty headcount in Pakistan has risen to 44.7% as per updated poverty line for lower income countries, according to a recent World Bank report. This means 108 million people have been pushed below the poverty threshold.

Poverty remains one of most pressing challenges, despite decades of economic reforms and policy efforts aimed at improving living standards. The real question is: what truly drives meaningful change? There are specific factors which, if prioritised by the state, have the potential to make a significant difference.

Education proves to be one of the most influential contributors to poverty alleviation and welfare improvement. Education not only increases earning potential but also improves access to better jobs and strengthens social mobility.

Self-employment also plays a key role in lifting families out of poverty. Households engaged in self-owned businesses or small enterprises experiences significant improvement in welfare.

This highlights the importance of promoting entrepreneurship and creating an environment where small businesses can thrive. In both urban and rural areas, access to healthcare, utilities like electricity and clean water, and adequate housing are closely linked to higher welfare levels. Affordable healthcare, especially for children and women, has a particularly strong impact. Having reliable access to basic services improves the quality of life and contributes to long-term poverty reduction.

Another critical factor is the role of social safety nets, particularly in rural areas. Government cash transfer programs, such as the Benazir Income Support Programme (BISP), provides valuable support for the poor, especially during economic shocks.

Surprisingly, the paid employment often failed to improve welfare levels. In fact, households with members in regular paid jobs experiences reduction in welfare. This is mainly due to low wages, job insecurity and wage inequality, especially in rural areas and low-skilled sectors. This suggests that simply having a job is not enough — it must offer fair pay and decent working conditions.

Asset ownership, particularly agricultural land, is not as effective in improving welfare as many would expect. This is largely due to the unequal distribution of land in Pakistan, where a small number of wealthy landowners control most of the valuable farmland. As a result, land ownership does not significantly help poor households improve their living conditions.

There also exist significant gender disparities. Female-headed households have welfare levels lower than male-headed ones, reflecting deep-rooted gender inequality. Women continue to face limited access to economic opportunities, lower wages and fewer educational chances. There is a clear difference in poverty dynamics between urban and rural settings.

In cities, education, self-employment and access to services like health and utilities are the strongest contributors to welfare improvement. In rural areas, social safety nets and access to basic health services are more critical, while land ownership and regular jobs offers limited benefits.

This means that one-size-fits-all solutions do not work. Urban and rural areas need different types of support, and policymakers must design region-specific strategies to effectively fight poverty.

The moment has arrived for the state to rethink its strategy for poverty alleviation. Economic growth alone has not been enough to lift people out of poverty. To make real progress, the country must focus on equitable income distribution, improved wages and affordable access to education, healthcare and housing.

Policymakers should also promote self-employment and small businesses while strengthening social safety nets, especially for women and rural households. Increasing women's participation in the workforce and providing them with targeted skill development, especially in technology and vocational sectors, will be essential for future progress.

In short, fighting poverty in Pakistan requires focusing on people, not just profits. A fairer, more inclusive development model is the key to building a more prosperous and equal society for all.