When we neglect education, the economy stalls

Where Pakistan stands today economically, morally, and politically is the outcome of decisions taken years ago. The decisions we make today will matter even more, because they shape the future of the country that our children and grandchildren will inherit.

This is not a problem we can keep pushing to the next government or the next budget cycle. The scale of the education crisis from primary schools to the university level demands urgent, coordinated action, the kind we manage to find when floods or earthquakes strike.

Three of our regional peers are spending 2.5× to 5× more on education than us, achieving nearly double the enrolment, half the youth unemployment, and 50 to 60% higher economic growth. Pakistan can, and must, close this gap within next 5 years.

Multilateral institutions warn that without systemic education reforms, Pakistan risks forfeiting 5% to 6.5% of potential GDP growth over the next five years. Evidence from our own past reinforces this warning; when Pakistan educated its people, Pakistan advanced. When we neglected education, the economy stalled. More than 25 million children are out of school, and our literacy rate has barely moved beyond 60%–62%. We often speak proudly of our young population as a demographic dividend, but without serious investment in education, that dividend will quietly turn into a burden.

Today’s economic landscape makes the need for reform even more urgent. Pakistan’s GDP is expected to reach $380 billion–$410 billion by the end of 2025, yet growth is projected to remain limited at 2.7%–3.0%. Meanwhile, 37% of our youth remain unemployed, unable to match the demands of modern sectors like IT, engineering, manufacturing, and services. The 2022 floods forced 3.5 million children out of classrooms, exposing the vulnerability of our schooling infrastructure and revealing how easily learning collapses during crises. Primary enrolment remains stuck at 76%, with a profound drop at secondary level, creating a dangerously narrow pipeline of skilled labour and perpetuating cycles of poverty and inequality.

The Cost of Inaction: Pakistan’s Education and Growth Gap with Regional Peers – 2025

The financial picture is even more alarming. Public education spending dropped to 0.8% of GDP in the first nine months of FY2025, one of the lowest allocations globally and far below regional averages. This is not simply inadequate; it is a form of national self-sabotage, leaving our classrooms under-resourced and our youth unprepared for the demands of a competitive world.

Yet this crisis is also our greatest opportunity. Research consistently shows that every 1% increase in workforce education can boost GDP growth by up to 0.62%. By investing in our people, strengthening our institutions, and aligning education with industry needs, Pakistan can build a resilient, self-sustaining economy capable of standing tall on the global stage.

The world offers many success stories that can guide us. Finland’s transformation through teacher empowerment, Singapore’s merit-based systems, and South Korea’s government led educational overhaul all demonstrate how strategic investment in education can propel nations from poverty to prosperity. China, through its skills focused reforms, achieved annual growth of 8–10% for decades while lifting millions out of poverty. These lessons are not foreign to Pakistan; they are templates we can adapt and scale.

A realistic five year vision for Pakistan is within reach. Public investment in education can rise to 3.5–4% of GDP, allowing us to halve the youth skills gap and reduce unemployment by at least 25%. We can achieve universal transitions from primary to secondary school, establish measurable improvements in learning outcomes, and build a system resilient to shocks such as floods and conflict. A National Skills and Apprenticeship Framework, combined with digital skills passports for graduates, can ensure every young Pakistani possesses nationally and globally recognised competencies.

Achieving this transformation requires a practical and phased approach. First, education financing must increase from the current 0.8% to 4% of GDP within five years, which translates to an additional $7.5–8.5 billion annually based on projected 2025 GDP. This can be phased responsibly: in the first two years, the budget should rise to 2.6% by reducing low-impact subsidies and improving tax efficiency; in the following three years, funding should reach the full target with ringfenced allocations for teacher salaries, technical and vocational education, and climate resilient infrastructure. Efficiency gains, such as digital payrolls to eliminate ghost employees, can free 0.3–0.5% of GDP, while donor alignment and private partnerships can provide additional leverage.

Second, Pakistan must rapidly scale vocational training and apprenticeships. Training two million skilled workers in five years — particularly in textiles, IT, construction, agriculture, and renewable energy — would significantly boost employment. Short certification programs of 3–6 months, costing approximately $600 per trainee, can be deployed nationwide. Employer led apprenticeships, supported by government subsidies for SMEs, will strengthen industry linkages and create immediate economic value.

Third, Pakistan must professionalise its teaching workforce. Training and recertifying 300,000 teachers within three years, supported by blended learning, licensing, and performance based progression systems, will dramatically improve learning outcomes. No country has improved its education system without improving teacher quality.

Girls’ education must become a strategic priority. Conditional cash transfers, safe transport systems, female teacher recruitment, and community driven interventions can close gender gaps, increase female labour force participation, and improve health and economic outcomes.

Digital skills should be embedded from grade six onward. Pakistan’s youth must be prepared for an increasingly digital world through early exposure to coding, digital literacy, and online freelancing opportunities. Partnerships with Pakistani tech companies and the global diaspora can accelerate this shift.

A modernised Education Management Information System can provide real-time dashboards tracking spending, TVET outcomes, teacher certification, transition rates, and system resilience. Transparent procurement and quarterly public reporting will build trust and improve accountability.

Immediate action is essential. Within the first 18 months, the government should establish a National Education Emergency Taskforce, allocate 0.2% of GDP to an education resilience fund, launch teacher training pilots, deploy digital learning platforms, initiate the National Skills Framework, and expand TVET capacity for at least 200,000 new learners.

The economic return on these reforms is undeniable. Higher skills directly elevate productivity, expand the formal job market, increase tax revenue, strengthen exports, and enhance national sovereignty. Capturing the full 5–6.5% GDP upside is not only possible, it is within close reach.

Pakistan has risen from adversity before. Now, we must channel that same national resolve into building an education system worthy of our ambitions. Our youth are not a burden; they are our greatest strategic asset which deserves a bright future. Investing in them today will transform our vulnerabilities into strengths and create the foundation for a confident, prosperous, and globally respected Pakistan.