akistan’s labour market faces challenges that could significantly impact the workforce and economic stability. The World Bank’s recent Pakistan Development Update has projected limited economic growth due to several factors, including devastating floods, strict monetary policies, and high inflation rates.

These challenges are particularly problematic for the more vulnerable members of the population. Unlike the Organisation for Economic Co-operation and Development (OECD) countries with historically high employment rates, Pakistan is contending with economic and political uncertainties, compounded by the aftermath of the Covid-19 pandemic. Therefore, it is crucial to address these issues proactively to ensure a better future for both employees and employers.

This article explores the significant challenges faced by Pakistan’s labour market, aiming to raise awareness and promote solutions. First, Pakistan’s labour market is currently grappling with a significant challenge of high unemployment rates of 7 percent, with an estimated 12.77 million people facing unemployment.

By the end of 2023, the job market will have hired 95.95 million people, resulting in an employment rate of 53 percent. The positive trend in employment rates indicates a promising outlook for the job market and the potential for economic growth. It has far-reaching implications for both the economy and society.

The pervasive nature of this issue has resulted in a large portion of the labour force needing help finding gainful employment, leading to a loss of human potential. This challenge has been a critical driver of poverty and social unrest as unemployed individuals grapple with basic needs, leading to declining living standards and discontentment with government policies. Underemployment is also prevalent, leading to decreased productivity and job dissatisfaction.

Youth unemployment is persistent, leading to demographic strains and youthful frustration. The presence of a skills gap further exacerbates the problem, as jobseekers’ skills need to align with the demands of employers. High unemployment rates also negatively impact economic growth by reducing consumer spending and hindering business development.

The informal economy, which is approximately $351 billion at GDP PPP levels, is the second most formidable challenge to Pakistan’s labour market. This sector operates without legal protection or social security benefits and depends on informal financial services. This precarious situation leaves workers in the informal economy vulnerable to job instability, low wages, and economic insecurity.

Furthermore, the informal economy exacerbates social inequalities and facilitates tax evasion, which impedes economic formalisation. These negative consequences disproportionately impact marginalised communities and women, who face additional barriers to education and skills development opportunities.

Inadequate skills and education among workers are the third substantial challenge to Pakistan’s labour market. Many individuals need more skills required by modern industries, leading to a mismatch between job opportunities and the available workforce.

This mismatch contributes to high levels of unemployment and underemployment, which, in turn, hinders economic growth and competitiveness. Furthermore, workers with insufficient skills tend to exhibit lower productivity levels, further perpetuating poverty and social inequality. Additionally, the country’s young population faces challenges securing suitable employment due to their educational deficiencies, potentially fueling frustration and social unrest. The emigration of highly skilled individuals seeking better prospects abroad exacerbates the issue, contributing to skill shortages within Pakistan.

Gender disparities in Pakistan’s labour market pose a fourth significant challenge for women and the overall economy. These disparities are primarily influenced by cultural norms and societal expectations that limit female workforce participation, resulting in a substantial gender gap. Occupational segregation often restricts women to low-paying and less-skilled jobs, contributing to wage disparities and limiting access to higher-paying roles.

The persistence of the gender wage gap is a significant concern as it erodes women’s financial independence and exacerbates gender-based poverty. Insufficient access to quality education and skills development further curtails women’s economic prospects. Many women turn to informal employment due to insecurity and limited benefits.

Workplace discrimination exacerbates these challenges, affecting hiring, promotions, and job conditions. The underrepresentation of women in leadership roles hampers the development of policies promoting gender equality.

Societal norms and cultural constraints perpetuate traditional gender roles, making it difficult for women to balance work and family responsibilities or pursue careers. Additionally, limited access to financial resources and credit further curtails entrepreneurial opportunities, and inadequate support for maternal health and family planning decisions forces women to choose between their careers and family life.

To address these challenges facing Pakistan’s labour market, a comprehensive approach is necessary, encompassing policy reforms, targeted interventions, and strategic investments. Here are some potential strategies that can be considered. First, implement programmes to enhance the workforce’s employability by bridging the gap between market-demanded skills and the skills possessed by workers.

With targeted vocational training programmes tailored to specific industries, such as manufacturing and technology, you can gain the skills you need to thrive in today’s job market. Take control of your career by investing in yourself and your future. Don’t wait for opportunities to come to you; create them.

Enroll now in vocational training programmes that equip you with the industry-specific skills and knowledge necessary to succeed. Additionally, establishing apprenticeship initiatives integrating aspiring workers with experienced professionals can provide practical, on-the-job training, contributing to a more skilled workforce. Collaborative partnerships between educational institutions and industries are essential in designing responsive curriculums that align with market needs, ensuring graduates possess the necessary skills for employment.

Second, encouraging the shift from the informal to the formal economy is crucial for sustainable economic development. It can be achieved by incentivising businesses and motivating them to register and adhere to regulations. Incentives might include tax benefits, streamline registration processes, and reduce bureaucratic hurdles.

Strengthening labour laws to safeguard the rights of formal workers, such as ensuring fair wages, safe working conditions, and legal protections against exploitation, is pivotal. Additionally, providing social security benefits, including healthcare, retirement plans, and insurance, can make formal employment more appealing to workers. By promoting the transition to the formal economy, Pakistan can enhance job security, improve workers’ well-being, and foster a more stable and regulated labour market conducive to sustainable economic growth.

Third, it is crucial to prioritise comprehensive education reform initiatives to enhance the quality of education across the country. It involves implementing measures that ensure curricula are aligned with the evolving demands of the job market, thereby addressing the persistent issue of a skills gap.

By improving technical and vocational education, Pakistan can equip individuals with the practical skills and knowledge required by rapidly evolving industries. This emphasis on technical and vocational education can be instrumental in producing a workforce adept at fulfilling the specific demands of various sectors, such as manufacturing, technology, and agriculture.

Furthermore, integrating practical, hands-on learning experiences into educational programmes can better prepare students for the realities of the workforce, facilitating a smoother transition from education to employment. By prioritising these education reforms, Pakistan can effectively address the mismatch between the workforce’s skills and the job market’s requirements, ultimately fostering a more skilled and competitive labour force capable of contributing significantly to the country’s economic growth and development.

Implement policies that promote gender equality, such as equal access to education and employment opportunities for women. Establish programmes that support women’s entrepreneurship, leadership development, and work-life balance. Encourage the participation of women in decision-making processes at all levels of the workforce.

Fourth, it is essential to reinforce social safety nets, such as the Benazir Income Support Programme (BISP), to support those facing unemployment or underemployment. Strengthening these safety nets could involve expanding the coverage and scope of comprehensive social welfare programs that offer financial assistance and essential services to vulnerable populations.

Implementing unemployment benefits would provide crucial relief to those temporarily out of work, easing financial burdens and enabling them to sustain a basic standard of living. Additionally, targeted assistance programmes tailored to the specific needs of marginalised groups, including youth and women, can play a pivotal role in addressing their unique challenges, such as limited access to education and employment opportunities.

By bolstering social safety nets and expanding their reach, Pakistan can effectively mitigate the adverse effects of unemployment and underemployment, ultimately fostering more excellent social stability and supporting the economic well-being of its workforce.

Finally, it is imperative to prioritise transparency, accountability, and efficiency in governing labour-related policies and institutions. It involves establishing and enforcing robust mechanisms that ensure fair and equitable treatment of workers, irrespective of gender, ethnicity, or other demographics.

Implementing anti-discrimination laws is crucial to safeguard the rights of all individuals within the workforce and foster an inclusive and diverse work environment. Furthermore, the effective enforcement of labour rights, including fair wages, safe working conditions, and protection against exploitation, is essential to protect the well-being and dignity of workers.

Establishing efficient mechanisms for resolving labour disputes promptly and impartially is paramount to maintaining a harmonious and productive labour environment. By promoting transparency, accountability, and efficiency in labour governance, Pakistan can foster a more conducive and equitable working environment, encouraging social harmony and economic development.

To confront multifaceted labour market challenges, Pakistan must adopt a comprehensive approach, encompassing policy reforms, targeted interventions, and strategic investments.

The writer is a data scientist at Knowledge Corporation, Dubai, UAE. He can be reached at syed@kcorp.net and tweets @Kazmi_m