LocationsThe Future of Work in the Age of AI
By Umer Akhlaq Malik | Policy Analysist, UNDP Pakistan
Almost 61 percent of Pakistani workers have an education below matriculation and only 3.2 percent have technical or vocational training. AI-driven automation is set to impact low-skilled and blue-collar workers, especially those from lower-income backgrounds.
Throughout history, technological revolutions have reshaped global employment trends, redefining the nature of work and workforce dynamics.
The first Industrial Revolution in the late 18th to early 19th century saw steam engines replace manual labor, displacing artisans with factory jobs. The second Industrial Revolution from the late 19th to early 20th century brought electricity and mass production, revolutionizing industries and rendering countless traditional skills obsolete. Fast forward to the Digital Revolution from the 1970s till the 2000s, when computers and automation transformed industries, drastically reducing the need for clerical and repetitive manual tasks while creating demand for new tech-driven skills. Jobs of typists, switchboard operators and traditional bookkeepers saw a sharp decline as digital systems took over data entry, communication and financial management. Manufacturing lines also became more automated, leading to job losses for assembly line workers while increasing the need for robotics maintenance and programming expertise.
Today, we stand at the dawn of the AI Revolution, where Artificial Intelligence (AI) is not just changing jobs but redefining them entirely. From predictive algorithms to generative AI, technology is augmenting human potential while raising pressing concerns about job displacement, workforce adaptation and the future of work. The true impact of this transformation will depend on how individuals adapt—whether they upskill to meet evolving demands or risk obsolescence in a rapidly changing job market.
The Impact of AI Automation on the Labor Market
The primary impact of AI will be on jobs involving repetitive manual tasks while professions dealing with complex information are likely to benefit. While short-term job losses are inevitable, AI is expected to drive long-term employment growth. Experts predict that AI and machine learning will create more jobs than they replace. According to the World Economic Forum, AI and technology could generate 170 million jobs by 2030 while displacing 92 million.1
Beyond employment shifts, AI has the potential to significantly boost economic growth. By 2030, it is projected to contribute an additional US$13 trillion to the global economy—equivalent to a 16 percent increase in cumulative GDP.2
However, the impact of AI on the labor market will not be equitable. Those with lower human capital will face greater challenges whereas higher-skilled workers will be better positioned to adapt and thrive.
Challenges
Pakistan's labor force faces significant challenges in adapting to AI-driven changes due to its low Human Capital Index (HCI) of 0.41, which is below the South Asian average and comparable to Sub-Saharan Africa. With expected years of schooling at just 9.4—and learning-adjusted schooling dropping to 5.1—educational attainment remains a major barrier.
Data from Pakistan's Labor Force Survey (LFS) 2020-21 provides insight into the country's low human capital base and its limited preparedness for AI-related jobs. A significant portion of the workforce at 37.4 percent is engaged in agriculture, a sector less likely to adopt AI. About 42 percent hold routine-based jobs such as clerical work, services, sales and machine operation. These jobs tend to be held by people with limited education and they face the highest risks of displacement as AI automates their functions.
There is a critical skills gap in Pakistan as 61.5 percent of workers have education below matriculation and only 3.2 percent have received technical or vocational training. AI-driven automation in Pakistan is set to disproportionately impact low-skilled and blue-collar workers, particularly those from lower-income backgrounds.
Women dominate the informal sector and they are especially vulnerable as AI threatens their roles in waste collection and manufacturing, risking their economic stability and widening gender inequality.
Limited internet access for 46 percent of the population is still a major issue. There is also a disconnect between education and industry demand that further hinders AI readiness. Pakistan risks falling behind in the AI-driven global economy without targeted reforms in education, digital literacy and vocational training.
Opportunities
There are promising signs of progress in Pakistan’s transition towards an AI-driven future. Pakistan produces over 25,000 Information Technology graduates3 with several universities now offering dedicated AI degree programs. Additionally, Pakistan's dynamic freelancing market has 2.37 million active freelancers who are generating $397.3 million in foreign remittances (Fiscal Year 2021-2022) and ranking third globally in growth.4 The country’s expanding IT market reflects Pakistan’s growing efforts to integrate AI into its economy and workforce, offering a foundation for future progress despite the existing challenges.
Sectors reliant on manual, repetitive tasks such as manufacturing, retail and agriculture face significant disruption as robotics, self-checkouts, AI-driven inventory systems and automated farming technologies reduce the need for low-skilled labor. To mitigate job losses, Pakistan must prioritize reskilling and workforce adaptation.
AI also presents new opportunities in emerging industries. Demand for AI specialists, data scientists and machine learning engineers are rising as businesses adopt AI solutions. Robotics and automation engineering is also expanding skills which are in demand in manufacturing, healthcare and agriculture. IT and cybersecurity are also experiencing rapid growth. AI-driven advancements in renewable energy such as smart grids and energy automation are also opening new career paths.
Participants, speakers and organizers pose for a group photo at the 9th edition of Women Tech Quest, held at NASTP in Karachi on February 15, 2025.
The Path Forward
It is critical to make investments in AI and digital literacy, technical education and innovation. To prepare Pakistan’s workforce for an AI-driven future, both the government and private sector must play proactive roles in education, training and innovation. The government must reform education by prioritizing Science, Technology, Engineering, Mathematics (STEM) subjects, expanding vocational training and integrating AI-focused courses into curricula. Investments in digital infrastructure such as high-speed internet and data centers will be crucial for AI adoption.
Policies should also encourage responsible AI use while supporting businesses through incentives for technology-driven job creation. Meanwhile, the private sector can drive innovation by investing in AI research, automation and workforce training. Companies should collaborate with universities to develop industry-aligned curricula, provide internships and support AI startups. By fostering public-private partnerships, Pakistan can mitigate job displacement, equip its workforce with future-ready skills and harness AI for economic growth.
As history shows, every disruption creates new possibilities. By embracing innovation and adapting to change, Pakistan can harness AI’s potential for economic growth and workforce resilience
1. World Economic Forum, Future of Jobs Report 2025, World Economic Forum, 2025, [online] Available at: https://reports.weforum.org/docs/WEF_Future_of_Jobs_Report_2025.pdf
2. McKinsey & Company, ‘Notes from the AI Frontier: Modeling the Impact of AI on the World Economy’, McKinsey & Company, 2025, [online] Available at: https://www.mckinsey.org/featured-insights/artificial-intelligence/notes-from-the-ai-frontier-modeling-the-impact-of-ai-on-the-world-economy
3. Ministry of Information Technology and Telecommunication, Pakistan’s IT Industry Report, Government of Pakistan, 2025, [online] Available at: https://moitt.gov.pk/SiteImage/Misc/files/Pakistan%27s%20IT%20Industry%20Report-Printer.pdf
4. Ignite, Final Report on Assessment of the Freelancing Ecosystem – DigiSkills.pk, Ignite, 2018, [online] Available at: https://ignite.org.pk/wp-content/uploads/2018/06/Final-Report-on-Assessment-of-the-Freelancing-Ecosystem-DigiSkills.pk_.pdf