Pakistan’s manufactured unemployment: a blueprint of state failure—II
If jobs matter, these must die
Pakistan doesn’t need more strategies. It needs the courage to kill the policies choking employment.
There are ten specific policy regimes that directly suppress job creation, productivity, and investment. Each serves a narrow elite while spreading costs across millions. Keeping them alive guarantees unemployment, brain drain, and stagnation.
- High interest rate regime as long-term policy
Kill: prolonged 20 percent+ policy rates treated as “normal”
Who benefits:
Commercial banks earning risk-free returns of 18–22 percent on government paper
Large depositors and speculators
The damage:
Destroys SME financing and freezes construction and manufacturing;
Rewards speculation over production;
Government debt servicing explodes, starving development; and
Youth entrepreneurship is crushed
Replace with:
Targeted credit windows for exporters, SMEs, and agriculture
Growth-linked monetary policy, not permanent contraction
Job creation potential:
Construction sector revival: 300,000–500,000 direct jobs
SME expansion: 400,000–600,000 jobs across manufacturing, services, retail
READ MORE: OPINION: Pakistan’s manufactured unemployment: a blueprint of state failure—I
Startup ecosystem growth: 50,000–100,000 jobs in first 3 years
Supplier chains and support services: 200,000+ indirect jobs
Total potential: 950,000–1.4 million jobs
- Blanket withholding tax regime
Kill: Turnover-based withholding taxes treated as final tax.
Who benefits?
Tax officials with arbitrary enforcement power
Informal operators and politically connected firms
The damage:
Punishes compliant businesses and kills cash flow
Forces firms into informality
Government loses broad, dynamic tax base
Investment climate poisoned
Replace with:
True income-based taxation
Simplified, predictable corporate tax system
Digital compliance without harassment
Job creation potential:
Formalization of informal businesses: 500,000–700,000 jobs becoming formal/protected
New business registrations: 150,000–250,000 jobs from entrepreneurship surge
Expansion of compliant SMEs: 200,000–300,000 jobs
Professional services growth: 30,000–50,000 jobs (accounting, legal, consulting)
Total potential: 880,000–1.3 million jobs
- Automobile Protection Wall (Up to 100 percent tariffs)
Kill: Decades-long infant industry protection
Who benefits:
A handful of assemblers and dealers
Licensed parts importers
The damage:
No exports, no localization beyond basic assembly
Consumers pay 2–3× global prices
Capital-intensive sector creates minimal jobs
Local value chains and skilled manufacturing never develop
Replace with:
Time-bound protection linked to exports and localization
Entry of global parts manufacturers
Performance benchmarks with sunset clauses
Job creation potential:
Tier 2 & 3 parts manufacturing: 150,000–250,000 skilled manufacturing jobs
Export-oriented component production: 100,000–150,000 jobs
Engineering and R&D: 15,000–25,000 technical jobs
Sales, distribution, after-sales for competitive market: 80,000–120,000 jobs
Skills training and vocational programs: 20,000–30,000 jobs
Total potential: 365,000–575,000 jobs
- Sugar industry protection & export subsidies
Kill: Guaranteed prices, export subsidies, and cartel tolerance
Who benefits?
Mill owners and political cronies
Middlemen controlling procurement
The damage:
Consumes scarce water and distorts agriculture
Benefits a few families, not farmers or workers
Massive hidden subsidies drain fiscal resources
Small farmers squeezed
Replace with:
Crop zoning based on water availability
Market-based pricing
Shift land to higher-value crops
Job creation potential:
High-value horticulture (fruits, vegetables): 250,000–400,000 farm jobs
Value-added food processing: 100,000–150,000 jobs
Export-oriented agribusiness: 80,000–120,000 jobs
Cold chain and logistics: 40,000–60,000 jobs
Agri-tech and support services: 20,000–30,000 jobs
Total potential: 490,000–760,000 jobs
- Capacity payment contracts without accountability
Kill: Take-or-pay IPP agreements immune from scrutiny
Who benefits?
Independent Power Producers and financiers
The damage:
PKR 2+ trillion annual drain through capacity payments
High electricity tariffs kill industrial competitiveness
Jobs lost before they’re created
Circular debt spirals
Households and industries crushed
Replace with:
Renegotiated contracts with cost-plus pricing tied to demand
Energy pricing structured for competitiveness
Accountability for performance
Job creation potential:
Manufacturing revival (textiles, steel, chemicals): 400,000–600,000 jobs
Energy-intensive export industries: 150,000–250,000 jobs
Industrial parks and SEZs becoming viable: 100,000–150,000 jobs
Supplier ecosystem expansion: 150,000–200,000 jobs
Small and medium industries restart: 200,000–300,000 jobs
Total potential: 1.0–1.5 million jobs
- Degree-centric education policy
Kill: University expansion without employability metrics
Who benefits?
Low-quality universities monetizing credentials over skills
The damage:
Produces unemployed graduates
Wastes public money subsidizing worthless degrees
Fuels brain drain and migration
Employers forced into expensive remedial training
Replace With:
Skills-first funding with mandatory industry placement
National skills forecasting aligned with job market needs
Accountability for graduate outcomes
Job creation potential:
Vocational training institutions: 30,000–50,000 teaching/admin jobs
Industry-ready graduates employed immediately: 300,000–500,000 youth entering workforce productively
Apprenticeship programs: 150,000–250,000 placements leading to jobs
Tech boot camps and digital skills: 50,000–100,000 jobs in digital economy
Reduced brain drain retains: 40,000–60,000 skilled professionals annually
Total potential: 570,000–960,000 jobs created/retained
- Labour laws that punish formal hiring
Kill: Rigid, harassment-based labour compliance
Who benefits?
Labour inspectors extracting rents
Employers exploiting informality
The damage:
Employers avoid formal jobs; informality crosses 60%
Workers lose protection anyway
State loses social security contributions and tax revenue
Hiring frozen by compliance burden
Replace with:
Simple, enforceable contracts
Digital compliance systems
Incentives for formal hiring, not penalties
Job creation potential:
Formalization of existing informal workers: 2.0–3.0 million workers gaining protections and benefits
New formal hiring unlocked: 500,000–800,000 jobs
Startup and SME hiring surge: 300,000–500,000 jobs
Labour compliance tech platforms: 15,000–25,000 jobs
Total potential: 2.8–4.3 million jobs formalized/created
- Export incentives without performance conditions
Kill: Subsidies without export growth targets
Who benefits?
Legacy exporters in low-value sectors
Rebate-dependent firms with no growth incentive
The damage:
Rewards inefficiency
Locks exports into low value-add
No job scaling or competitiveness gains
Billions spent, minimal return
New exporters and high-value industries starved
Replace with:
Incentives linked to volume, value-add, and jobs created
Sunset clauses forcing productivity gains
Support conditional on export performance
Job creation potential:
High-value textile and garments: 200,000–300,000 jobs
Engineering goods and auto parts exports: 100,000–150,000 jobs
IT services and software exports: 150,000–250,000 jobs
Pharmaceuticals and chemicals: 50,000–80,000 jobs
Processed foods and value-added agriculture: 100,000–150,000 jobs
Total potential: 600,000–930,000 jobs
- Labour export as development strategy
Kill: Celebrating emigration as economic success
Who benefits?
Overseas recruitment agents earning fees
Banks collecting remittance charges
Host economies gaining skilled workers
The damage:
Brain drain in healthcare, engineering, skilled trades
Destroys long-term domestic productivity
Normalizes policy failure
Future middle class exported
Human capital lost permanently
Replace with:
Retention incentives for skilled professionals
Reverse brain drain programmes
Domestic job creation benchmarks
Accountability for employment outcomes
Job creation potential:
Retention of doctors and nurses: 15,000–25,000 professionals serving domestically
Engineers in local manufacturing and tech: 30,000–50,000 retained talents
Skilled trades building domestic infrastructure: 50,000–80,000 workers
Entrepreneurs launching local businesses instead of emigrating: 20,000–40,000 startups creating 100,000–200,000 jobs
Multiplier effects from retained spending and investment: 150,000–250,000 indirect jobs
Total potential: 365,000–605,000 jobs created/retained
- Untargeted subsidies masquerading as social policy
Kill: Energy, fertilizer, and price subsidies captured by elites
Who benefits?
Large landholders
Energy-intensive industries
Import/distribution cartels
The damage:
No productivity gains
Fiscal drain devours development spending
Market distortion worsens inequality
Small farmers and young families bear the cost
Replace with:
Direct cash transfers to those who need them
Productivity-linked support with performance conditions
Time-bound assistance with clear exit criteria
Job creation potential:
Fiscal space freed for infrastructure: 300,000–500,000 construction jobs
Targeted social programmes (health, education): 100,000–150,000 service sector jobs
Small farmer productivity programs: 200,000–300,000 agricultural jobs
Efficient energy enabling industrial growth: 150,000–250,000 manufacturing jobs
Digital cash transfer system administration: 20,000–30,000 fintech jobs
Total potential: 770,000–1.23 million jobs
The following is aggregate job creation potential if all ten policy regimes are killed and replaced:
Conservative estimate: 8.8–11.5 million jobs created or formalized
Optimistic estimate: 12–15 million jobs with full implementation and multiplier effects.
The hard truth
These policies survive because they protect powerful interests.
Killing them will:
Upset entrenched elites
Trigger organized resistance
Create political noise
However, keeping them alive guarantees the following:
Chronic unemployment
Accelerating brain drain
Economic stagnation
Social instability
The brutal pattern across all ten:
Rents are privatized to narrow, organized elites
Costs are socialized across taxpayers and citizens
Jobs and productivity are sacrificed to preserve elite interests
This isn’t incompetence—it’s systemic rent preservation.
Paid for by unemployment, wasted potential, and lost futures.
There is no third path
You cannot create jobs with policies designed to protect inefficiency.
Pakistan’s choice is simple:
Kill these policies—or let them kill the future.
Copyright Business Recorder, 2026
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