How do economies grow? By putting their productive resources to the most efficient use. Yet in Pakistan, nearly half of this potential remains underutilized. Women make up 49 percent of the population, but only 21.4 percent of working-age women participate in the labour force. This is among the lowest rates in the world and the region (global average: 52.6 percent; South Asia: 25.2 percent).

In stark contrast, nearly 60 percent of Pakistan’s female population is enrolled in the Benazir Income Support Programme (BISP), the country’s flagship cash transfer scheme for vulnerable, women-headed households.

While BISP provides vital short-term relief, mounting evidence suggests an unintended consequence: declining female labour force participation (FLFP) over time.

According to the neoclassical household labour supply model, unconditional non-labour income such as cash transfers can reduce labour supply, particularly in the absence of active labour market policies. Over time, such dependency becomes entrenched and increasingly difficult to reverse. With limited fiscal space, governments tend to prioritize short-term relief measures, particularly when it is politically expedient, often at the expense of long-term investment in human capital.

This trade-off is reflected in Pakistan’s federal budgets.

Since BISP has evolved into a robust, data-driven platform, it should be used for more strategic resource allocation by shifting the focus from broad coverage to meaningful impact. To achieve this, two shifts are essential.

First, BISP support should be linked to formal, women-friendly employment to break the cycle of reliance and promote women’s economic mobility. This requires revising eligibility so that employed women who meet vulnerability criteria still qualify. Support can include disability aid, daycare, transport subsidies, school stipends for children of widowed or divorced women,........

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