Pakistan is celebrating a historic surge in remittance inflows, USD 38.3 billion in FY 2024–25, up 27 percent from last year. This feels like a victory, but it also serves as a warning.
While this historic inflow eases the country’s current account deficit and strengthens foreign exchange reserves, the truth behind the numbers is harder to celebrate because most of this money comes from unskilled, low-paid labor abroad. However, this remittances phenomenon does not reflect, nor is it necessarily linked to strong macroeconomic foundations within country. Moreover, this model cannot secure Pakistan’s economic future.
From FY 1971 to FY 2025, over 14.4 million people migrated from Pakistan for employment. Till June 2025, around 336,442 workers left the country. But the majority of workers registered for employment abroad are unskilled or semi-skilled.
Around 84 percent of total workers abroad were unskilled labourers, primarily working as drivers, general laborers, cooks, and cleaners. In contrast, skilled and highly qualified workers made up a minor share of only 2.6 percent of the total.
Heavy reliance on unskilled or low-skilled workers is highly alarming and highlights a critical question: Can this surge in remittance with low-skilled manpower continue over the longer period? The answer is a clear ‘No’, since skilled workers can easily substitute unskilled workers.
Moreover, unskilled or low-skilled manpower faces difficult working conditions, earns lower wages, and contributes significantly less to technological transfer in society and economic development. This is the structural failure of Pakistan’s existing labour paradigm, whose foundation is based on exporting unskilled and low-income labourers abroad, which is neither sustainable nor progressive over the long run. This record-breaking inflow of USD 38.3 billion should drive a significant transition from exporting labour to exporting skills.
The Gulf Cooperation Council (GCC) countries, mainly the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE), remain the dominant destinations for Pakistani overseas labour. Pakistani workers dominate the construction sector, transportation, and domestic service industries in the GCC nations. Recent numbers from the Pakistan Economic Survey highlight that more than 7.3 million overseas labourers have been registered for the KSA alone, followed by the UAE, with around 4.3 million.
However, a significant challenge looming is that the GCC economies are revising their labour immigration policies to prioritize skilled and highly qualified workers. Under KSA Vision 2030 and UAE Centennial 2071, both economies are tightening their quotas, lowering their dependency on low-skilled overseas workers, and increasing demand for skilled workers in digital services, healthcare, sustainable energy, tourism, and hospitality.
Economies such as India, the Philippines, and Bangladesh are already exporting skilled workers worldwide. Besides earning higher wages per worker, countries that send out skilled labour also gain significant bargaining power in labour negotiations. Bangladesh has expanded into providing skilled workers in clothing, hospitality, and shipbuilding.
The Philippines has capitalized on the global care industry, through the export of highly trained caregivers and nurses. Meanwhile, by exporting highly qualified professionals and digital service workers abroad, India has established itself as an IT hub, which offers higher wages and legal protections to the overseas workers.
If Pakistan continues exporting unskilled and untrained workers abroad, it will significantly lose its market share. To remain competitive, Pakistan must strategically expand into higher-value sectors. This entails developing a precise roadmap that aligns its labor force with the needs of host countries.
Moreover, it requires upgrading and modernizing vocational and technical training centers that already exist across Pakistan, ensuring they adhere to international certification standards, and focusing on emerging sectors and labour market demands globally, such as green building, digital services, caregiving, and tourism management.
To achieve this, Pakistan must modernize and overhaul its existing training infrastructure so that Pakistani workers can confidently and credibly access skilled markets abroad. Pakistan needs a comprehensive approach that involves the public as well as the private sectors.
The Ministry of Overseas Pakistanis, NAVTTC, and provincial TEVTAs need to play a significant role. With an internationally competitive labour force, not only can Pakistan increase the inflow of future remittances but also transform its existing labour paradigm into a more dignified, resilient, and strategic national asset.
Additionally, countries that prioritize soft skills alongside technical skills in their workforce enable better integration into workplaces globally. Soft skills, including communication, teamwork, digital literacy, and problem-solving, are becoming more valued in international labor markets along with technical skills.
Pakistan should also focus on developing the soft skills of its overseas workers alongside technical and vocational expertise. This will improve their ability to negotiate better positions and maintain long-term overseas employability.
India and the Philippines not only train their workers in technical skills but also emphasize soft skills that boost their competitiveness and adaptability in foreign markets. If Pakistan neglects this, even skilled and highly qualified workers may fall behind or struggle to compete in competitive markets. Incorporating soft skills into training programs would improve the agility, resilience, and global competitiveness of Pakistan’s labor force.
In a world of increasing protectionism, relying on the exports of unskilled and low-wage labour is not just risky; it’s a missed opportunity. Hence, remittances inflow will remain vital, but to make it more resilient, Pakistan must transform its model and shift its focus from quantity to emphasizing quality.
Pakistan can not only maintain its remittance inflows but also amplify their impact by innovative policies, strategic partnerships, and bold investments.
The USD 38.3 billion inflow isn’t just a financial statistic; it is a mirror reflecting the potential and limitations of Pakistan’s existing labor paradigm. Pakistan faces a choice: invest in skills, development, and strategic labour negotiations to build a bigger, stronger, and brighter future, or keep exporting unskilled, low-wage labour and watch its market share decline. The decision is ours.
Copyright Business Recorder, 2025
The writer is a Research Economist at Pakistan Institute of Development Economics (PIDE). She can be reached at: [email protected]
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