Pakistan’s Manufactured Unemployment – Part 2

By Fazeel Asif

If Jobs Matter, These Must Die

Pakistan doesn’t need more strategies. It needs the courage to kill the policies choking employment.

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.

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For Part 1 of this article, click here.

For more such Opinions & Blogs, click here.

1. High Interest Rate Regime as Long-Term Policy

Kill: Prolonged 20%+ policy rates treated as “normal”

Who Benefits:

• Commercial banks earning risk-free returns of 18–22% 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
• Youth entrepreneurship 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

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

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2. 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 enterpreneurship 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

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3. Automobile Protection Wall (Up to 100% 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

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4. 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

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5. 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

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6. 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 bootcamps 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

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7. 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

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8. 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

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9. 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 programs
• 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

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10. 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 programs (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

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The 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
• But keeping them alive guarantees:
• 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.

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For Part 1 of this article, click here.

For more such Opinions & Blogs, click here.

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.

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By Fazeel Asif. The writer can be reached at fazeel63@gmail.com.

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