LAHORE: A modest degree of inequality can serve a useful economic purpose. It rewards effort, encourages innovation and motivates individuals to improve their circumstances. But when inequality crosses a certain threshold, it ceases to be an incentive and becomes a structural barrier.
In Pakistan this imbalance is now so pronounced that economic growth is no longer translating into improved living standards for the majority. As GDP figures rise, a large segment of the population feels excluded from the benefits of growth. When people begin to believe that they have no stake in their country’s economic progress, social cohesion weakens. Economies, in such conditions, risk becoming ‘hollow’ -- where wealth, opportunity and upward mobility are concentrated in the hands of the privileged few.
As a consequence, excessive inequality results in poorer health outcomes, unequal access to education and diminished life prospects. These disparities, in turn, undermine productivity, weaken human capital and threaten long-term economic stability.
Nowhere is this more evident than in Pakistan’s deeply divided education system. A dual-track structure has emerged: one for the affluent, who attend well-resourced private schools and universities, and another for the majority, who rely on underfunded and often dysfunctional public institutions. Graduates from elite institutions are significantly better equipped in terms of knowledge, skills and confidence. Unsurprisingly, they dominate both public- and private-sector employment on merit.
For students emerging from low-quality government schools and lesser-known colleges, the playing field is far from level. As a new generation of highly qualified graduates enters the job market, the gap will only widen. Young people from poorer backgrounds are increasingly likely to conclude that hard work alone is insufficient to secure upward mobility. This perception can breed frustration, disengagement and ultimately a loss of faith in the system.
The affluent have access to high-quality private healthcare and experienced specialists, while the poor depend on overstretched public hospitals. Although many of the same doctors serve in both sectors, their presence and attention in public facilities are often limited. Patients in government hospitals are frequently left in the care of junior staff, resulting in substandard treatment. Over time, poor health reduces the productivity of individuals from disadvantaged backgrounds, trapping them in a cycle of poverty and limited opportunity.
Several emerging economies have grappled with high levels of inequality and have made notable progress through targeted interventions. In Latin America, countries such as Brazil have implemented policies that simultaneously reduced poverty and inequality. In South Asia, Bangladesh and Sri Lanka have made strides by promoting female participation in the workforce, thereby expanding economic inclusion and improving household incomes.
These examples demonstrate that inequality is not an intractable problem. However, addressing it requires deliberate and sustained policy choices. There is no single solution, but certain priorities are clear.
First, governments must invest more effectively in public goods, particularly education and healthcare. It is not enough to increase spending; the focus must be on improving quality and access. Bridging the gap between urban and rural services is essential, as is ensuring that public institutions can compete, at least in basic standards, with private alternatives.
Second, social safety nets must be redesigned to be both targeted and conditional. For example, financial support could be tied to school attendance, especially for girls. Incentives such as food rations or stipends for families that ensure regular school attendance have proven effective in other countries.
In Pakistan, however, many support programmes remain unconditional, with limited emphasis on human capital development. Budgetary priorities often overlook the transformative potential of targeted interventions in education and health.
Finally, corruption remains a central driver of inequality. It distorts resource allocation, weakens institutions, and disproportionately harms the poor. Tackling corruption is a long-term challenge that requires institutional reforms, transparency, and political will. It cannot be resolved quickly, but sustained efforts can yield meaningful progress over time.
Excessive inequality is an economic risk. If left unaddressed, it will continue to erode opportunity, weaken productivity and undermine national stability.
