Labour market faces mismatch between skills, demand

Pakistan's labour market is facing key challenges, including a mismatch between workforce skills and global demands, low female participation in green and digital sectors, reliance on Gulf countries for overseas jobs, which makes remittances vulnerable, and irregular migration and human smuggling – the issues that remain unresolved.

The economy is dependent on unskilled labour migration, with regional disparities and slow progress in vocational training reforms. High migration costs, irregular migration and outdated safety standards further pose risks to both domestic employment and foreign labour prospects. Urgent policy action is needed to bridge skill gaps, empower women, diversify labour markets and ensure safe migration.

The Pakistan Economic Survey 2024-25, released on Monday, has identified several critical challenges facing the country's labour market, youth employment and overseas workforce, raising concerns over the pace and effectiveness of government reforms.

According to the Seventh Population and Housing Census conducted in 2023, the population of Pakistan has reached 241.5 million, comprising 124.3 million males and 117.2 million females. A notable demographic characteristic of Pakistan is its substantial youth population as it has 26% of individuals aged between 15 and 29 years and 53.8% of the total population within the working-age group of 15 to 59 years.

While initiatives such as the Prime Minister's Digital Youth Hub and the National Adolescent and Youth Policy show promise in addressing the evolving needs of the youth, the survey reveals that the mismatch between workforce skills and market demands remains a persistent obstacle. A significant proportion of Pakistani emigrants – around 50% – still belong to the unskilled labour category, limiting their earnings potential in international markets.

According to the 2024 data of the Pakistani workers registered for overseas employment, 50% (366,092) fall under the unskilled category while 35% (255,706) are skilled workers. Although there has been a slight decline compared to 2023, the unskilled labour is in high demand globally, particularly in construction, domestic work and agricultural sectors.

Experts warn that gender disparity is another serious concern. Women are underrepresented in the sectors expected to benefit from green and digital transitions. The report cites International Labour Organisation (ILO) estimates indicating that female workers are likely to benefit 30 to 46 percentage points less than men in emerging employment opportunities, primarily due to male-dominated industries and inadequate access for women to STEM education and digital skills training.

According to an ILO brief, investments in renewable energy and energy efficiency to achieve net zero carbon emissions by 2050 are expected to generate 37.2 million more jobs than the business-as-usual scenario. Additionally, investments aimed at universal broadband coverage by 2023 are projected to create 23.5 million more jobs.

The survey flags Pakistan's overreliance on Gulf countries for overseas employment, with 96% of registered migrant workers heading to Gulf Cooperation Council (GCC) member countries, especially Saudi Arabia and the United Arab Emirates (UAE). This dependence exposes Pakistan's remittance inflows – a major source of foreign exchange – to regional economic and political shifts. In addition, the lack of highly skilled migrant professionals reduces Pakistan's competitiveness in advanced sectors such as healthcare, IT and engineering.

In 2024, the Bureau of Emigration and Overseas Employment (BE&OE) and the Overseas Employment Corporation (OEC) registered 727,381 workers for overseas employment. According to BE&OE, more than 62% (452,562) of Pakistani workers moved to Saudi Arabia for employment, followed by Oman (11%), to earn a living. The UAE employed 64,130 Pakistani workers (9%) while Qatar offered jobs to 40,818 individuals (6%). Bahrain and Malaysia hosted 25,198 workers (3%) and 5,790 workers (1%), respectively.

Since 1972, more than 14.22 million Pakistanis have proceeded abroad for employment in over 50 countries through official procedures till March 2025.

Provincial imbalances persist in overseas employment trends, where Punjab and Khyber-Pakhtunkhwa dominated while Balochistan, Gilgit-Baltistan and tribal regions remain underrepresented. High migration costs, inadequate training infrastructure and socio-cultural barriers are cited as the main factors behind this disparity.

In 2024, the highest number of workers who went abroad for employment was from Punjab (404,345), followed by Khyber-Pakhtunkhwa (187,103), Sindh (60,424) and tribal areas (29,937).

The ministry issued 65 new licences to overseas employment promoters (OEPs), bringing the total number of operational licence holders to 2,264.

Despite the government's efforts to digitise emigration processes via the Pakistan Emigrant Management Framework (PEMF) and to enhance overseas employment opportunities through the OEC, irregular migration and human smuggling pose unresolved threats, necessitating stricter enforcement and international cooperation.

The survey also points to the slow adoption of green and digital skills in the technical and vocational education and training (TVET) sector, warning that unless reforms are accelerated, Pakistan's workforce risks falling behind in the global green economy and digital transformation wave.

Occupational safety and health (OSH) frameworks remain outdated in many industries, with weak enforcement in informal and high-risk sectors. Though Pakistan has ratified several key ILO conventions, implementation challenges continue to undermine worker safety and rights protection.

The report stresses that demographic pressures remain both a challenge and an opportunity. Without significant investments in education, skill development and gender-inclusive labour policies, Pakistan risks wasting its youth bulge – a potentially powerful driver of economic growth.

Policy analysts recommend urgent action for bridging skill gaps, expanding women participation, diversifying labour export destinations and modernising labour policies to fully harness the human capital potential.