With nearly half of Pakistanis below the World Bank’s lower-middle-income poverty threshold, lasting poverty reduction depends on expanding productive employment. Yet jobs cannot be sustained merely through government spending, subsidies or protecting uncompetitive industries. They require an economy capable of producing goods and services that customers, at home and abroad, are willing to buy at competitive prices. Five interconnected priorities—education, employment, exports, environment and energy—must therefore be judged by their contribution to productivity, competitiveness and livelihoods.

Unfortunately, our priorities are frequently misplaced. We establish universities while millions of children lack basic literacy. We protect industries in the name of employment while weakening their competitiveness. We seek higher exports while burdening producers with expensive energy, complex taxation and regulatory inefficiencies. We invest in electricity generation without ensuring its affordable delivery and productive use. Environmental sustainability remains an afterthought, except when foreign buyers demand compliance.

We also measure inputs rather than outcomes: universities instead of learning, factories instead of productivity, megawatts instead of affordable electricity, and exports instead of domestic value addition.

Educating the nation should be given importance before paying attention to universities for degrees.Approximately 25.1 million children, aged five to 16, are out of school; many enrolled children lack reading and arithmetic skills. Universities matter for science, engineering and research, but their growth without stronger foundations or employment prospects risks producing graduates without marketable skills.

Poverty will be reduced by enabling more Pakistanis to participate productively in a competitive economy; misplaced priorities require policy changes

Public spending should prioritise primary education, teacher effectiveness, literacy and numeracy. Provinces should publish independently assessed learning outcomes, not merely enrolment figures. Secondary education must offer credible vocational pathways, with apprenticeships designed jointly by employers and training institutions.

Women’s participation deserves special attention. Better education, safe transport, childcare and flexible employment could unlock an enormous productive resource. Pakistan cannot achieve broad-based prosperity while much of its potential workforce remains economically excluded.

Protecting existing employment is not the same as creating sustainable jobs. High tariffs raise consumer prices and downstream costs while weakening innovation. Strategic considerations aside, temporary assistance may help promising industries acquire technology, skills and scale, but must carry deadlines and measurable productivity, export and employment conditions.

Garments, home textiles, food processing, leather, footwear, sports goods, selected engineering components, agriculture and tradable services offer opportunities to build upon existing capabilities. Tourism and mineral extraction and processing can also create employment, provided infrastructure, governance and environmental safeguards factors are addressed.

The auto-parts industry illustrates the need for differentiation. Partnerships with foreign assemblers have developed valuable engineering capabilities but model proliferation and the absence of competitive upstream steel and petrochemicals constrain scale. Greater opportunities may lie in standardised components, replacement parts, agricultural machinery and selected exports rather than attempting comprehensive localisation of every vehicle. The government support should reward competitive capabilities, not permanently compensate for their absence.

Exports face more than exchange-rate and market-access constraints: low productivity, fragmented production, costly energy and finance, delayed refunds and unpredictable policies undermine competitiveness. Diversification should build on existing capabilities: technical textiles and synthetic-fibre products, processed and branded foods, and internationally certified engineering components.

Export houses, clusters, shared facilities and collective procurement can help smaller firms afford machinery, specialised management, testing and certification. Digital technologies and AI can improve manufacturing, agriculture logistics and services, provided skills, connectivity and workforce adaptation accompany them.

Tax policy must stop penalising formalisation and growth. Competitive rates, stable rules, timely refunds and duty-free imported inputs are essential. Trade preferences help but cannot indefinitely offset inefficient production. AI should likewise serve competitiveness, not become another justification for incentives.

International buyers, particularly in Europe, increasingly demand traceability, responsible water use, wastewater treatment, lower emissions and credible labour standards. Non-compliance risks market access, while efficient energy, water and material use can reduce costs.

Environmentally compliant export clusters should provide shared effluent treatment, recycling, testing, certification and cleaner energy, enabling smaller firms to meet requirements without individually financing expensive facilities. Environmental policy belongs within industrial strategy, not merely buyer compliance. Cleaner air, safer water and responsible resource use also improve citizens’ health and welfare.

Pakistan’s electricity sector shows the consequences of disconnected policymaking. Investment in generation was encouraged through guaranteed returns without sufficient attention to future demand, transmission capacity or affordability. Capacity payments must be recovered even when plants operate below potential. High tariffs discourage industrial consumption and encourage alternatives to the grid. Reduced electricity sales then spread fixed costs over fewer units, reinforcing pressure for higher tariffs. The answer cannot simply be to raise tariffs further. Where spare capacity exists, additional industrial consumption should be encouraged through competitively priced incremental electricity, particularly during off-peak periods. Provided tariffs cover the additional costs of generation and delivery, extra sales can contribute towards fixed costs that would otherwise remain unrecovered.

Surplus generation capacity does not necessarily mean cheap electricity, particularly where imported fuel is expensive. Nor can available power be utilised without adequate transmission and distribution infrastructure.

Investment priorities should therefore shift towards removing transmission bottlenecks, reducing distribution losses, improving collections and connecting productive demand to available capacity.

Predictable time-of-use tariffs and reliable supply could encourage additional production shifts, industrial electrification and exports. Higher utilisation could progressively reduce the fixed-cost burden per unit, creating scope for more competitive tariffs.

These five priorities cannot be pursued independently. Better skills require employment opportunities. Competitive industries need skilled employees, affordable energy and efficient logistics. Export diversification requires scale, technology and environmental compliance. Increased electricity consumption depends on productive investment.

The author is a former CEO of Unilever Pakistan and of the Pakistan Business Council.

Published in Dawn, The Business and Finance Weekly, November 2nd, 2026