More than two-thirds of Pakistan’s population is under 35, presenting an extraordinary opportunity and a formidable economic challenge. The Financial Times has warned that the population could approach 400 million by 2050. Whether this expansion becomes a demographic dividend or a national burden will depend on Pakistan’s ability to educate its young people, create productive employment and reform an economic model that has failed to deliver broad-based prosperity.

Pakistan’s challenge is not simply to manage population growth. It is to transform the economic system through which people seek opportunity.

The Productivity Trap: Pakistan’s employment challenge concerns not only the number of jobs but also their quality. An economy can generate millions of livelihoods without providing secure work, rising incomes or competitive businesses.

World Bank figures cited indicate that labour productivity grew by around 0.4 per cent annually between 2014 and 2024. Approximately 3.5 million people enter the workforce each year, while 17.7 million net new jobs were reportedly created between 2018 and 2024. Yet much employment remains informal, low-paid or self-employed.

These figures require careful interpretation: employment growth does not necessarily mean formal job creation, and not everyone reaching working age immediately enters the labour market. Still, the underlying problem is clear: Pakistan struggles to turn its expanding workforce into higher productivity and sustained growth.

The causes are structural. Policy uncertainty, protection from competition, weak exports and incentives favouring short-term financial returns over productive investment constrain expansion. Businesses face inconsistent rules, expensive energy, costly financing and complicated taxation. Government borrowing can offer comparatively predictable returns, drawing capital away from industrial expansion, technology and entrepreneurship.

The result is an economy unable to produce enough competitive businesses and productive jobs for its growing population.

Investing in Human Capital: no economic transformation can succeed without investing in people. Pakistan faces a severe education crisis: millions of children are out of school, while many enrolled students fail to acquire basic literacy and numeracy.

Policy must move beyond enrolment figures and school construction.........

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