EDITORIAL: A recent World Bank report on global development has highlighted that artificial intelligence (AI) could worsen Pakistan’s job-market crisis.
AI is expected to have a worldwide impact on employment, although its effects could differ across developed and developing countries. At the same time, it will create opportunities for those who take the right steps at the right time.
Companies and governments in the developed world are spending huge sums on AI, as reflected in the staggering $775 billion being invested by just five US companies. This investment will generate greater efficiencies, but it could also eliminate numerous entry-level jobs. Many fresh graduates are already struggling to find employment, and this challenge is only likely to accentuate.
This could also affect the growth of Home Remittances to Pakistan, as fewer educated and skilled workers may find employment opportunities in the West and the Middle East. Together, these regions account for the bulk of workers’ remittance inflows into Pakistan.
Over the past two decades, Pakistan has relied heavily on inward remittances to support its balance-of-payments position. Domestic economic productivity has declined relative to the rest of the world, resulting in weaker exports and growing imports in real terms. This gap has largely been filled by the continued strong growth in remittances.
With AI threatening jobs and the possibility of an economic slowdown in the Middle East due to the ongoing war, Pakistan’s external challenges are likely to increase over the medium term.
There is also a risk of job losses in the domestic market, both in export-oriented services and local businesses, as AI rapidly penetrates the economy and automated systems take over knowledge-based tasks. Pakistan’s fastest-growing export segment is IT and other business services, which have doubled to around $6 billion over the past few years.
However, much of this work consists of relatively basic tasks that Pakistan secures because of labour-cost arbitrage. AI is rapidly taking over such tasks, reducing the need for outsourcing. The cost of using AI is significantly lower than employing workers in developing countries, meaning this labour-cost advantage is diminishing. Low-end and entry-level roles are particularly vulnerable to automation.
Therefore, the growth of services exports based on low-skilled work is likely to slow. India is already bearing the brunt of this shift because of the size of its outsourcing industry. Pakistan and other developing countries may soon begin to feel the heat as well.
Meanwhile, SMEs in the domestic market are reducing headcounts and subscribing to AI tools to replace tasks previously performed by employees.
Pakistan’s authorities and technology companies must adapt to these rapidly changing global realities. They need to move up the value chain by developing expertise in more sophisticated areas and moving beyond call centres, basic coding and routine number-crunching jobs. However, this is easier said than done. According to industry experts, many of Pakistan’s large IT companies are not yet prepared to embrace this transformation.
Another opportunity is to use AI to improve the capabilities of underprepared high-school and college graduates by helping them acquire marketable skills. Instead of relying solely on lengthy degree programmes, young men and women could be selected through screening and provided with skills required by both local and international firms. AI could also be used to significantly improve the country’s healthcare and education systems, where traditional approaches have often failed.
In short, AI could offer more advantages than disadvantages to countries such as Pakistan, provided resources are deployed effectively. Otherwise, it could become a nightmare, as the country does not have sufficient buffers to withstand several years of economic and employment disruption.
Copyright Business Recorder, 2026