Pakistan loses $31.5 billion annually to workforce skills gap

Pakistan faces an annual economic loss of approximately $31.5 billion due to a significant skills gap that reduces worker productivity and unrealized export potential, according to World Bank estimates. The crisis is driven by a severe shortage of technical and vocational training; only 7% of Pakistani youth receive formal vocational education, significantly lower than the regional average of 22%.

Unemployment remains a critical issue, particularly among educated citizens. Graduate unemployment has reached 18.3%, while unemployment for graduates aged 20 to 24 is as high as 32.8%. Furthermore, nearly one-third of Pakistanis aged 15 to 29 are not engaged in education, employment, or training, a figure that exceeds 50% among young women.

The technology sector is also struggling to absorb new talent. In 2024, tech companies hired only 13,350 fresh graduates from a pool of approximately 72,952, representing an absorption rate of 18.3%. Experts warn that the rise of artificial intelligence may further complicate entry-level employment requirements, necessitating stronger industry partnerships and improved career guidance.