Iqra Zar
Pakistan’s young population is often described as its greatest national asset. Yet every year, nearly 800,000 graduates enter a job market that increasingly struggles to absorb them. According to a 2024 report by the Pakistan Institute of Development Economics (PIDE), more than 31 percent of young graduates are unemployed, with postgraduate degree holders among the hardest hit.
At the same time, Pakistan has emerged as the world’s second-largest supplier of digital labour, while IT exports reached $3.38 billion during July – March FY2025-26, reflecting a 19.7 percent increase over the previous year. These two realities are not coincidental. They expose a structural disconnect: Pakistan’s youth employment strategy remains designed for an industrial economy, while the global labour market has shifted toward digital technologies, artificial intelligence, and platform-based work.
Unless this mismatch is addressed through comprehensive reforms rather than incremental adjustments, Pakistan’s much-celebrated demographic dividend, with 64 percent of its population under the age of 30, could become one of its greatest policy failures.
The contradiction at the centre of Pakistan’s human capital crisis is evident. Universities continue expanding enrolment while producing graduates whose skills often fail to match labour market requirements. Today, more than 200 higher education institutions produce roughly 500,000 graduates annually. However, academic programmes remain heavily dependent on rote learning, theoretical instruction inherited from colonial-era education systems, and limited collaboration with industry.
Pakistan allocates only 0.8 percent of its GDP to education (July–March FY2024–25), far below UNESCO’s recommended benchmark of 4–6 percent, leaving little room for meaningful structural reform. This is not simply a question of educational quality but of strategic direction. Many social science and humanities programmes continue preparing students for shrinking public-sector employment opportunities, while Technical and Vocational Education and Training (TVET) institutions remain underfunded and socially undervalued.
As a result, graduates are often trained for occupations increasingly vulnerable to automation, while high-demand sectors such as cloud computing, cybersecurity, data analytics, artificial intelligence, digital content creation, and platform-based entrepreneurship receive comparatively limited attention.
The government’s flagship initiative, DigiSkills.pk, administered by Ignite under the Ministry of Information Technology and Telecommunication, represents an important step toward addressing this gap. During July–March FY2025–26, the programme delivered more than 5.14 million training sessions, while its trainees collectively earned approximately $1.65 billion through freelancing. These achievements are significant.
However, an independent evaluation commissioned by Ignite highlighted an important limitation: the programme primarily measures enrolment rather than verified competencies or long-term employment outcomes. Completing an online course certificate does not necessarily translate into sustained employability.
Furthermore, only 28 percent of DigiSkills participants are women, and most beneficiaries come from four major urban centres, Karachi, Lahore, Islamabad, and Faisalabad, leaving substantial regional and gender disparities unaddressed.
Similar limitations exist within reforms undertaken by NAVTTC and the Prime Minister’s Youth Programme. These initiatives often respond to current labour market conditions instead of anticipating future demand. The World Economic Forum’s Future of Jobs Report estimates that automation could displace 85 million jobs globally while creating 97 million new ones, largely in digital technologies, green industries, healthcare, and artificial intelligence.
Pakistan has made only limited progress in translating these forecasts into curriculum reform or workforce planning. The country continues preparing workers for today’s gig economy while tomorrow’s labour market, shaped by generative AI, cybersecurity, automation, and advanced digital infrastructure, is already emerging.
International experience demonstrates that alternative approaches are possible. Estonia introduced digital literacy into primary education during the 1990s and now possesses one of the world’s most digitally advanced public sectors. South Korea aligns vocational education with projected employer demand through continuous collaboration between industry and education providers.
India’s National Skills Development Corporation, despite its own challenges, increasingly incorporates labour market intelligence into workforce planning. In contrast, Pakistan’s training institutions remain largely supply-driven, offering programmes based on institutional capacity rather than evolving industry needs.
Closing Pakistan’s digital skills gap requires comprehensive reforms. First, digital and artificial intelligence literacy should become a compulsory component of secondary education alongside mathematics and language rather than remaining optional subjects. While Pakistan’s Artificial Intelligence Policy 2025 outlines this ambition, implementation now requires curriculum reform, teacher training, and classroom integration nationwide.
Second, the Higher Education Commission should introduce performance-based funding that rewards graduate employability, industry partnerships, and labour market outcomes. Universities that consistently demonstrate successful graduate employment and strong corporate collaboration should receive greater institutional support than those operating in isolation from market realities.
Third, DigiSkills must evolve beyond measuring enrolment numbers toward evaluating measurable competencies and employment outcomes. Competency-based assessments, post-training employment tracking, and direct partnerships with digital employers and global freelancing platforms would provide far more meaningful indicators of programme success than course completion certificates alone.
Fourth, TVET reform should become genuinely demand-driven. Sector Skills Councils with meaningful employer representation should update training curricula every 18 months using real-time labour market intelligence. Strengthening the Pakistan Bureau of Statistics’ capacity to generate timely employment data would significantly improve workforce planning.
Finally, Pakistan’s rapidly growing freelance economy—now among the world’s five largest, with more than 2.3 million active freelancers—requires stronger institutional support. Accessible international payment systems, social protection mechanisms, tax facilitation, and entrepreneurship support extending beyond major metropolitan centres would help transform freelancing from an informal income source into a sustainable pillar of the national economy.
Pakistan’s youth unemployment crisis is not the result of too little education; it is the consequence of an education system that continues preparing graduates for jobs that are disappearing. When 31 percent of graduates remain unemployed while the country’s digital economy expands by nearly 20 percent annually, the problem is not a shortage of opportunity but a profound mismatch between education and labour market demand. Pakistan’s demographic dividend has a limited window of opportunity.
It will only become a lasting economic advantage if the country’s young population possesses the skills needed to compete in a rapidly evolving digital economy. Every year that reforms are delayed transforms this potential asset into an increasing liability. Pakistan must decide whether it will prepare its youth for the economy of tomorrow or continue training them for jobs that no longer exist. The time available to make that choice is steadily narrowing.
Iqra Zar is an MS Media Science student at Bahria University, researching digital policy, education, media, and youth development.
