Government to formalise SMEs as informality hits 84%

The implementation of the National SME and Worker Formalisation Roadmap will pave the way for competitive economic growth by promoting stronger institutions, higher productivity and improved working conditions in the SME sector. This was jointly stated by Haroon Akhtar Khan, Special Assistant to the Prime Minister on Industries and Production (MoIP), Malik Aman, Joint Secretary MoIP, Nadia Jehangir Seth, CEO SMEDA, and Geir T Tonstol, Country Director of the ILO in Pakistan, while commenting on Pakistan's first National SME and Worker Formalisation Roadmap.

Haroon Akhtar Khan described the roadmap as a central pillar of Pakistan's economic transformation. He said formalisation expands opportunities by improving access to finance, technology, export markets and decent work. With 44% of GDP remaining informal and millions of workers outside social protection, he emphasised the need for structural reforms aligned with modern supply chain expectations.

Joint Secretary Malik Aman said the initiative reflects the government's effort through the ministry's Technical Working Group. The roadmap, he noted, outlines realistic pathways for simplifying SME onboarding, harmonising labour definitions and expanding digital mechanisms to ease compliance.

SMEDA CEO Nadia Jahangir Seth said SMEs are central to economic activity and that formalisation is vital for unlocking growth potential. She reaffirmed SMEDA's commitment to strengthening the SME Registration Portal, expanding advisory services and supporting SMEs and home-based workers in meeting sustainability and traceability requirements. Pakistan continues to face widespread informality, with 84% of the workforce outside the formal sector. The roadmap responds by aligning national perspectives and introducing sequenced reforms to make formalisation more accessible and beneficial for SMEs.