The informal economy in Pakistan is large where workers have limited access to labour welfare services. The Labour Force Survey 2017-18 states that the informal sector accounts for 71.7 per cent of the employment in main jobs outside agriculture, more in rural areas (75.6 per cent) than in urban areas (68.1 per cent). Overall, there has been a slight decrease in the informal sector if we compared to the Labour Force Survey 2008-09 data on informal sector which shows the informal sector accounts for more than 73.3 per cent of the employment in main jobs outside agriculture. The key sector of employment in the informal economy are wholesale and retail trade manufacturing, community/social and personal services, construction and transport. 

Following the 18th Constitutional Amendment, in 2010, which resulted in devolution of labour administration from Federal to Provincial Governments, efforts have been made to formulate provincial labour policies. In 2018, the provincial governments of Punjab, Sindh and KP developed their respective Labour Policies with focus on contemporary labour issues and challenges.
The Punjab Labour Policy 2018, incorporates, for example, areas such as effective implementation of labour standards, social dialogue, improvements in workplace safety, living wages, child and bonded labour, awareness raising, and excellence in labour inspections regime. 

The informal economy in Pakistan is characterized by several decent work deficits and challenges including rights at work, child and bonded labour, social protection, lack of sustainable employment, working poverty, gender-based discriminations. The DWCP (2016-2022) has its focus on promoting decent work in rural economy, which constitutes a large segment of informal economy in the country. In addition, rural economies are characterized by low productivity, informality and weak enforcement of laws, among others.