LAHORE: Developing labour markets that cater to both young and old is crucial for economic and social stability. Pakistan’s labour market reforms must address key challenges, including youth unemployment, low female participation, lack of social security for older workers, and the mismatch between skills and job opportunities.
To create a more inclusive labour market, the government must take several steps. For youth inclusion, the education system -- which currently produces graduates with degrees but without job-ready skills -- should integrate vocational training in fields such as IT, engineering and industrial manufacturing to bridge the skills gap.
Formal apprenticeship programmes should be encouraged through public-private partnerships, enabling young people to gain work experience. Supporting young entrepreneurs through soft loans and incubation centres can help generate employment opportunities rather than relying solely on existing industries.
For older workers, reskilling and lifelong learning are essential. Many struggle to keep up with technological advancements. The government and industry should offer skill refreshment programmes, particularly in digital literacy. Part-time and remote work opportunities can enable older professionals to remain active in the workforce while accommodating their needs. Pension reforms and enhanced insurance schemes should support those unable to continue full-time employment.
A significant portion of Pakistan’s workforce operates in the informal sector, lacking legal protections and job security. Providing incentives for businesses to register and comply with labour laws can help ensure fair wages and benefits. Increasing women’s workforce participation requires better transport facilities and workplace safety measures. Policies that promote remote work and flexible shifts can further enhance female participation, while stronger enforcement of equal pay regulations will help eliminate gender-based wage disparities.
Facilitating industrial growth is key to job creation. Instead of prioritising housing schemes, industrial expansion should take precedence to generate long-term employment. Well-planned special economic zones (SEZs), focusing on labour-intensive industries such as textiles, auto parts, and food processing, can accommodate both young and older workers. Strengthening labour laws, ensuring their enforcement, and expanding social security coverage can protect workers from exploitation.
Pakistan has the advantage of a young population, but swift action is needed to ensure that labour markets accommodate all age groups. Otherwise, the demographic dividend may turn into a crisis of unemployment and economic strain. Two key sectors with the potential to generate significant employment and boost GDP growth are value-added textiles and the IT sector.
The textile sector remains heavily reliant on raw exports (yarn, fabric) rather than high-margin finished products such as apparel, home textiles and technical textiles. To enhance job creation and competitiveness, the government must introduce specialised training in garment design, digital textile printing and automated stitching to facilitate a shift from low-value to high-value production.
Pakistan also lags in fashion marketing and brand development. Collaboration between textile firms and fashion institutes can bridge this gap. Training in specialised areas such as medical textiles, sports textiles and industrial fabrics can also help expand exports beyond traditional markets.
Automation in cutting, dyeing, and stitching should be encouraged, with workers trained to operate and maintain advanced machinery. As international buyers increasingly demand eco-friendly textiles, training in sustainable production methods -- including organic cotton processing and water recycling in dyeing -- can add value.
Unlike Bangladesh, which has successfully built global brands, Pakistan lacks strong local brands. Training in brand development and e-commerce (eg selling via platforms like Amazon and Alibaba) is crucial. Textile firms also require market intelligence skills to tap into high-margin markets such as Japan, Australia, and the Middle East, rather than relying solely on Europe and the U.S.
Despite the high demand for software engineers, data analysts, cybersecurity experts, and AI specialists, Pakistan faces an acute shortage of skilled IT professionals. This is largely due to a skills mismatch, as most IT graduates lack hands-on experience in programming, cloud computing, and AI. Brain drain remains a significant challenge, with skilled IT workers migrating to the US, Canada, and the Middle East in search of better salaries. Furthermore, universities in Pakistan tend to produce general IT graduates, with little focus on high-demand fields such as cybersecurity, blockchain, or UI/UX design.
Addressing this talent shortage requires introducing coding boot camps, AI/ML courses, and cybersecurity training in collaboration with private companies. The IT sector must also develop an apprenticeship system, allowing fresh graduates to work on real-world projects while acquiring specialised skills.
Pakistan is a global leader in freelancing, yet many freelancers earn below their potential. Training in high-value skills such as SaaS development, DevOps, and cloud security can help boost their incomes. To reduce brain drain, IT firms should offer incentives such as stock options, remote work flexibility, and tax benefits.
Women’s participation in the IT sector remains below 10%. Implementing policies that promote hybrid work models and ensure safe workplace environments can help increase women’s employment in the tech industry. By addressing these labour market challenges, Pakistan can unlock its economic potential and create a more inclusive workforce that benefits all age groups.