Challenges and Opportunities for the Labour-Driven Workforce
by Zahra Mansoor
Pakistan stands at a critical juncture in its AI journey. The country can either embrace Artificial Intelligence (AI) responsibly, ensuring economic inclusion, or risk exacerbating unemployment and economic disparity.
AI is rapidly reshaping global industries, with automation driving efficiency and innovation. However, in a country like Pakistan—where the workforce is heavily labor-driven—the rise of AI presents unique challenges. With over 60% of the population under the age of 30 and a labor market dominated by low-skilled and semi-skilled, how can Pakistan navigate the AI revolution while ensuring minimal job displacement?
Pakistan’s Workforce Landscape
The Pakistani labor market is diverse, with agriculture employing 37.4%, manufacturing 20%, and services 42.6% of the workforce. Many jobs remain labor-intensive, making them highly susceptible to automation. Although AI-driven technology is still in its nascent stages in Pakistan, automation is gradually penetrating industries such as textiles, banking, and retail.
The textile industry is experiencing a significant shift with the introduction of automated looms and AI-powered quality control systems, reducing reliance on manual labor. In the banking sector, AI chatbots are now handling up to 50% of customer queries, which has led to a reduction in human customer service representatives. Similarly, the retail and e-commerce sector is evolving, with digital platforms transforming traditional retail, impacting employment in brick-and-mortar stores.
The Threat of AI to Pakistan’s Workforce
Unlike developed economies, where AI is disrupting white-collar jobs, Pakistan’s workforce faces an entirely different risk—automation replacing traditional blue-collar and service-sector jobs. The country’s key employment sectors include agriculture, textiles, retail, construction, and informal labor markets, which together employ millions. The rise of AI-powered automation in these industries could lead to significant job losses.
1. Manufacturing and Textile Industry
Pakistan’s textile industry, which contributes nearly 60% of total exports and employs millions, is gradually adopting automation. AI-driven machines can now operate looms, monitor fabric quality, and manage production with minimal human intervention. While automation boosts efficiency, it also reduces the demand for manual labor, threatening a sector that is a major employer of low-skilled workers.
2. Retail and Customer Service
The retail sector, which employs a large segment of urban workers, is seeing the emergence of AI-driven solutions such as chatbots, self-checkout systems, and e-commerce platforms. While platforms like Daraz and Foodpanda have created new digital jobs, traditional retail and customer service roles face disruption as companies move towards automation.
The banking sector, employing over 200,000 people, is undergoing a shift as AI takes over customer service roles. Banks like HBL, UBL, and Meezan have introduced AI chatbots, reducing dependence on human representatives and customer service staffing.
3. Agriculture and Informal Economy
Pakistan’s agriculture sector employs 38% of the workforce, yet it remains largely dependent on outdated techniques. AI-powered drones, smart irrigation, and automated harvesting systems are gradually entering the industry. While these technologies promise higher yields, they also threaten the livelihoods of millions of unskilled agricultural workers.
Global Lessons: Minimising Job Displacement
Several countries have proactively addressed AI-driven job displacement by implementing policies and programs that focus on workforce reskilling, digital literacy, and labor market reforms. China has invested heavily in AI reskilling initiatives, offering government-backed training programs aimed at transitioning workers from traditional manufacturing jobs to high-tech industries. The Chinese government has also established AI research hubs and innovation centers to support the integration of automation across different sectors while maintaining employment growth.
India, on the other hand, has emphasized IT education and AI-powered job creation. Recognizing the role of digital skills in the modern economy, India has expanded its STEM education programs and invested in AI-driven startups. Tech giants in India, such as Infosys and Tata Consultancy Services (TCS), have launched AI upskilling platforms, enabling professionals to adapt to the changing job landscape. This strategic focus on AI literacy has positioned India as a global hub for digital services and remote work.
Germany has taken a different approach by implementing robust labor laws to ensure a balance between automation and employment. Through collective bargaining agreements and social security programs, Germany has mitigated mass layoffs due to automation. The government collaborates closely with businesses and unions to develop policies that promote worker retraining while ensuring companies can integrate AI without significant workforce disruptions. The German model highlights the importance of labor protections in maintaining social stability amid technological shifts.
How Pakistan Can Minimize AI-Driven Job Displacement
Pakistan can draw valuable insights from these global and adopt a strategic approach to AI integration, ensuring that technology serves as a tool for empowerment rather than mass unemployment. Here’s how:
1. Reskilling and Upskilling the Workforce
Pakistan’s education and vocational training systems must pivot towards digital literacy, AI awareness, and technical skills training. Currently, only a fraction of the workforce has access to formal education in AI-related fields. TEVTA (Technical Education & Vocational Training Authority) and NAVTTC (National Vocational and Technical Training Commission) must expand their programs to include AI, coding, data analysis, and robotics training.
2. AI-Driven Job Creation in Emerging Sectors
With Pakistan being the fourth-largest freelancing nation, AI is creating new opportunites, thus the government must further invest in digital infrast-ructure, affordable internet, and IT training to shift displaced workers towards online employment.
Additionally, new roles such as AI supervisors, data labelers, and cybersecurity experts will emerge, requiring targeted skill-building initiatives.
3. Public-Private Partnerships for AI Integration
The government must collaborate with private tech firms, universities, and international organizations to develop AI policies that protect jobs while enhancing productivity. Incentives should be provided to businesses that integrate AI without mass layoffs. Initiatives like “Made in Pakistan AI” programs could encourage local innovation, reducing reliance on imported automation solutions.
4. Strengthening the Social Safety Net
Pakistan lacks a strong social protection system, making job displacement particularly devastating for workers with no savings or alternative employment options. The government should consider expanding social security programs, implementing minimum wage adjustments, and offering temporary financial assistance to workers transitioning to new industries.
5. Responsible AI Adoption in Industry
Businesses must adopt “Augmented AI” rather than “Replacement AI”—a model where AI assists rather than replaces human workers. For instance:
- AI can be used in agriculture to enhance farmers’ productivity rather than replace them.
- In customer service, AI-powered chatbots can handle routine queries, while human agents manage complex cases.
- In factories, automation can be phased in while simultaneously upskilling workers for higher-value roles.
Pakistan at a Crossroads
Pakistan stands at a critical juncture in its AI journey. The country can either embrace AI responsibly, ensuring economic inclusion, or risk exacerbating unemployment and economic disparity. The government, businesses, and civil society must work together to turn AI into an opportunity rather than a threat.
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