The global economy hosts an enormous undocumented sector, often referred to as the grey, shadow, or informal economy. The share of the informal economy is substantially larger in the developing world compared to developed countries. This is also true for Pakistan. SMEDA, an autonomous institute curated by the Government of Pakistan to assist small and medium enterprises, estimates that the size of the informal economy in Pakistan is almost 64% larger than the country's formal economy. Furthermore, it evaluates that approximately 72.5% of Pakistan's labour force, outside of the agriculture industry, is employed by the informal sector.

The large size of the informal sector can be owed to several factors, including overpopulation and the inability of existing businesses and government agencies to ingest the accelerating increase in the workforce. The informal economy caters to various entities such as street vendors, small business owners, domestic workers, etc.

Furthermore, the share of women exceeds the share of men. Businesses and workers in the informal economy are unregistered. This implies that they are unprotected by labour laws as well as social protection systems such as pension schemes, unemployment benefits, and health insurance. Due to this, labourers are subjected to unfavourable working conditions, earning below the minimum wage and employing long hours.

The existence of informal sectors is detrimental to a society, especially in the short term. It leads to income inequality and exaggerates gender wage discrimination. This is exceptionally relevant to Pakistan, where 40% of the population resides below the poverty line. Furthermore, the consequences are more severe for women than for men. Out of the 40% of the people living below the poverty line, 75% are estimated to be women. Despite the increase in female workforce participation in the past two decades, women continue to be disadvantaged due to gender and religious norms in the country. In this essay, I aim to explore some of the reasons why women suffer more than men in the informal economy.

According to the World Bank, more than half of Pakistan's female population does not have access to primary education. Furthermore, only 10% of Pakistani women have postsecondary education. This limits the opportunities for female participants in the workforce. The lack of education of the female population can be owed to societal norms that subject women to traditional gender roles. Many women in Pakistan are forced to opt out of education by their immediate family members to pursue marital roles and obligations. Furthermore, women are mostly encouraged to pursue higher education, especially in the field of medicine, to appear more marriageable instead of more qualified. Many rural spaces also do not have easy access to schools and universities, contributing to the rural-urban divide. Additionally, societal norms limit the mobility of women, and men are more likely to migrate to other cities to pursue education.

Another reason women are more disadvantaged is the lack of reproductive health services and education in the country. This is amplified by marriage laws in Pakistan. In some provinces, such as Punjab, marriageable age by law is as low as 16 years of age. This contributes to a high fertility rate, leading to overpopulation in the country.

Furthermore, this is one of the main reasons many women are forced to opt out of quality education, as it contributes to time constraints, additional household responsibilities, and healthcare concerns, impacting their competitiveness in the market economy. Due to this, several women have to resort to the informal sector for jobs, where the payscale is considerably low. This entraps women in a poverty cycle as low-paying jobs contribute little to financial independence.

Women are also subjected to discrimination when it comes to inheritance rights in Pakistan. By law, male family members are entitled to a greater share of property inheritance than women. Societal norms and customs further exaggerate the problem. According to a survey by Awaz Foundation Pakistan, 86% of Pakistani women are denied their rightful share in inheritance. Family members often employ tactics of guilt and coercion to force women into forgoing their share in property. Owing to a lack of education and financial dependence, women in vulnerable situations are easily pressured into compliance. The justice system in such situations is also known to be complacent, allowing the manipulation of legal loopholes. Such discriminatory measures continue to exclude women from gaining financial autonomy, condemning them to a vicious cycle of poverty with meagre opportunities when it comes to employment.

According to a World Bank study, women are also ten times more likely than men to engage in unpaid work in the informal economy, leading to a greater gender divide. Unpaid work entails caregiving responsibilities pertaining to children and the elderly, which hinders them from employing time in building relevant skills for prospective job opportunities in the formal sector. Furthermore, as women are subjected to gender roles that expect them to perform such tasks, their contributions often go unrecognised or underappreciated. Studies have also found that in the case of own account workers, especially in the agriculture industry, men are usually categorised as employees, while their female counterparts are only viewed as contributing family members. Therefore, not only do women earn less than men in the informal sector, in many cases they are not paid at all.

Women are further exempt from meaningful employment opportunities due to the unavailability of gender-friendly workspaces. Many workplaces do not cater to women's needs in terms of adequate facilities for young mothers, sufficient parental leaves, or favourable working hours. As a result, several women opt out of many career opportunities, leading to under-representation of women in several key sectors. Furthermore, the patriarchal nature of the country poses several safety risks for women in society. Consequently, women feel unsafe using public transport or working odd hours, resulting in disengagement of women from economic activities. This amplifies the gender division in labour, leading to fewer opportunities for women in the formal economy.

While Pakistan, in the past two decades, has seen an increase in female participation in the workforce, the situation remains less than ideal. In order to rectify the problem of female discrimination and the gender gap in the country, it is essential for the government to take serious measures. The most evident way to advance female participation in the formal economy would be to enforce strict laws that encourage the female right to education. Furthermore, it is important for the government to implement laws that prevent early marriages in order to control the rapidly increasing birth rate in the country and encourage more female participation in the economy. Lastly, firm laws need to be set in place that protect female autonomy and battle severe social issues such as harassment and coercion of women.