AI could reshape Pakistan’s labour market, puts service-sector jobs in focus: World Bank

ISLAMABAD: Artificial intelligence (AI) could reshape Pakistan’s labour market, with 61 percent of service-sector workers employed in occupations with above-median AI exposure, raising both productivity opportunities and concerns over potential job displacement, according to the World Bank.

The Bank’s report Pakistan Development Update assessment of AI exposure and job complementarities in Pakistan shows that the technology’s impact will vary sharply across sectors, with services facing the greatest exposure while agriculture remains relatively insulated from its immediate effects.

According to the report, Job Opportunities and AI in Pakistan, the country’s average occupational AI exposure score in 2024 stood 0.48 standard deviations below the median occupation. Pakistan’s exposure broadly aligns with the average for emerging markets and developing economies.

The report highlights a significant disparity in AI exposure across economic sectors. While 61 percent of service-sector workers are employed in occupations with above-median AI exposure, the corresponding shares stand at just 7 percent in manufacturing, 5 percent in other industrial sectors and less than one percent in agriculture.

Wholesale and retail trade, financial and insurance activities, real estate and education are among the service subsectors where more than 80 percent of workers are employed in highly AI-exposed occupations.

The findings suggest that AI could substantially transform jobs involving information processing, administrative tasks and other knowledge-intensive activities. However, exposure does not necessarily mean that workers will lose their jobs, as AI can also complement human skills and improve productivity.

The World Bank’s analysis distinguishes between occupations in which AI could assist workers and those in which technology could substitute for human labour.

In 2024, around 18 percent of employed workers in Pakistan were in occupations characterised by both high AI exposure and high human-AI complementarity, while only 8 percent were in highly exposed occupations with low complementarity. The report suggests that occupations with stronger potential for worker augmentation could benefit more from AI-assisted productivity gains.

Real estate and education are characterised primarily by complementary exposure, indicating scope for AI-assisted productivity improvements.

Wholesale and retail trade, by contrast, combines a large employment share with high AI exposure, making it a particularly important sector for the labour-market transition.

The report also stresses that the economic significance of AI exposure depends on the number of workers employed in affected sectors, rather than exposure levels alone.

Although some sectors have high exposure, their relatively small employment shares may limit the economy-wide impact.

Wholesale and retail trade accounts for a substantial share of both complementary and substitutable jobs, highlighting the importance of the sector in determining how AI adoption could affect employment patterns across Pakistan.

Agriculture, which employs a large segment of the workforce, remains overwhelmingly concentrated in low-exposure occupations. This could limit the immediate labour-market impact of AI in the sector, although technology may still offer opportunities to improve agricultural productivity.

The World Bank cautions that AI’s effects will depend on how businesses and workers adopt the technology, as well as the availability of relevant skills and complementary investments.

For Pakistan, the findings underline the need to prepare workers for changing occupational requirements while enabling businesses to use AI to improve productivity.