Reforming the state to create 30 million jobs

Employment generation is not merely a growth objective; it is a sovereign stability imperative

ISLAMABAD:

During his recent visit, Ajay Banga warned that Pakistan must create 2.5 to 3 million jobs annually – roughly 30 million over the next decade – or risk converting its demographic advantage into instability.

This is not a development slogan but a structural test of the state. In today's geopolitical environment, economic resilience is inseparable from national security. A country unable to productively absorb its youth risks internal volatility, fiscal fragility and strategic vulnerability. Employment generation is, therefore, not merely a growth objective; it is a sovereign stability imperative. With nearly two-thirds of the population under 30, Pakistan possesses one of the largest youth cohorts in the world. A young population can expand consumption, entrepreneurship and industrial scale – but only if growth translates into productive employment. The issue is not growth alone, but growth that absorbs labour.

Growth without labour absorption

Pakistan's growth episodes have often been consumption-driven, import-dependent and concentrated in capital-intensive sectors. Export sophistication remains limited, manufacturing depth shallow, and agriculture largely confined to low-value output. The result is a pattern of jobless growth: output expands, but labour absorption lags. This reflects structural weaknesses in incentive design and regulatory architecture. Without correcting those foundations, higher GDP will not automatically translate into employment.

Education as constitutional and economic imperative

The foundation of any employment strategy must be human capital. Article 25-A of the Constitution guarantees every child the right to education. That guarantee cannot be reduced to producing clerical or bureaucratic aspirants for public-sector roles.

Education must mean employable skills, technical competence and professional discipline aligned with market demand. Vocational and technical training has long been treated as secondary to academic credentials. Yet successful labour-absorbing economies built strong industry-linked skill ecosystems – aligning technical institutes with sectoral needs and embedding apprenticeship pathways into manufacturing expansion. Pakistan must move decisively in that direction. Polytechnics, digital training centres, construction institutes and agro-processing academies are not peripheral institutions; they are central to productivity. Education reform must focus on employability and enterprise readiness, not simply certification.

Informality trap and private sector constraint

The public sector cannot generate 30 million jobs. Private enterprise must lead. Small and medium enterprises – the backbone of employment – remain constrained by regulatory complexity and limited access to finance. Formalisation is often treated as enforcement rather than facilitation. Multiple tax layers and overlapping compliance obligations raise the cost of scaling, discouraging expansion.

As a result, firms remain small and informal. Without access to credit, technology and export markets, productivity stagnates and wages remain low. If employment expansion is the objective, regulation must shift from extraction to enablement. The private sector should be treated not merely as a revenue source, but as a strategic partner in national development. Sustainable job creation flows from competitive firms and export capacity. Economic strength rests on enterprise strength.

The state architecture problem

Taxation, labour regulation and social security operate through overlapping frameworks that lack coordination. Policy reversals further discourage long-term investment. Pakistan does not lack reform proposals; it lacks institutional coherence. Enterprise policy, export strategy, taxation design and skills development often function in silos rather than as a unified employment doctrine. When taxation undermines industrial policy, training systems disconnect from sectoral demand, and regulatory unpredictability deters capital formation, the state weakens its productive base. Fragmented governance erodes economic resilience.

Limited manufacturing diversification constrains labour absorption. Agriculture remains concentrated in primary output while higher-value processing lags. Industrial policy must move beyond broad incentives towards consistent sectoral focus. Engineering goods, agro-processing, construction materials, light manufacturing and IT-enabled services offer scalable employment potential. Continuity and predictability matter more than episodic incentives.

Peripheral districts represent untapped employment frontiers. Infrastructure gaps suppress enterprise formation, while improved connectivity and credit access can transform migration corridors into labour-absorbing centres. Balanced regional development is not merely political equity; it is economic necessity. For decades, outward migration functioned as a pressure valve. Remittances cushioned domestic employment shortfalls and overseas markets absorbed part of Pakistan's workforce. That cushion is narrowing.

Immigration regimes are tightening, preference systems prioritise high-skill entrants, and automation is reducing demand in routine occupations – precisely where many developing-country workers compete. If external absorption slows while domestic job creation remains inadequate, demographic pressure will accumulate internally. A strategy built on exporting surplus labour is no longer reliable.

Creating 30 million jobs is not a programme but a structural redesign of the economic state. It requires shifting from revenue-maximising regulation to productivity-enhancing governance; from compliance-heavy oversight to enterprise facilitation; from degree accumulation to industry-aligned skill formation; from fragmented policymaking to coordinated execution. Employment intensity must become the central benchmark of economic success. Pakistan now faces a generational choice: treat employment as a secondary outcome of growth and risk instability, or anchor the economic model around labour absorption and rising productivity.

A young population without economic integration is not a dividend but deferred risk. Economic exclusion fuels outward migration, social fragmentation and declining institutional trust. Economic policy is therefore not separate from internal stability; it is its foundation. The time for incremental adjustment has passed. What is required is institutional courage to align education, enterprise and exports around one objective: productive employment at scale. In the twenty-first century, economic security is national security. No nation secures itself by leaving its youth without work.

The writer is a PhD, former executive director general, Board of Investment, public policy & corporate law expert