South Asia stands at a defining moment. The latest World Bank South Asia Development Update 2025 released in the first week of October, 2025 describes a region divided between two worlds: one, a traditional economy built on low productivity and informal work; the other, a modern economy driven by technology, trade, and innovation. Both exist side by side, but the gap between them is widening.
The report expects South Asia’s growth to reach 6.6 percent in 2025 before easing to 5.8 percent in 2026. Yet, growth alone does not guarantee progress. Across the region, job creation has lagged far behind the rise in the working-age population due to various reasons inter alia the mismatch between the training provided and actual need of the local and international industry. In Pakistan, where youth make up a majority of the labour force, this mismatch is fast becoming a structural fault line. The report notes that every year, about sixteen million South Asians enter the job market, but only ten million find work. Without deeper reforms, the rest are left behind or seek opportunities abroad.
The World Bank highlights that while South Asia’s modern economy, technology hubs, service exports, and manufacturing, is competitive and better paid, most people remain trapped in the traditional economy of small farms and informal work. For Pakistan, this imbalance is evident in its shrinking industrial base, low productivity, and dependence on short-term consumption growth. Although, seamless efforts are under way but to meet the global expectations, a policy dialogue inviting to all stakeholders is the exigency of time. However, past trade reforms briefly improved competitiveness, but progress slowed as policy inconsistency, high energy costs, and weak industrial linkages took hold.
The report argues that South Asia can unlock growth by combining trade reforms with investments in human capital. Reducing tariffs on imported inputs, improving infrastructure, and supporting the free movement of labour would allow industries to grow and absorb more workers. Pakistan’s earlier tariff cuts in the early 2000s raised its trade-to-GDP ratio by one quarter, showing that reform works when pursued with consistency. But trade openness alone will not solve the jobs crisis unless matched with strong skills development systems.
Based upon practical hands on experience and academic discourse, here lies Pakistan’s real challenge. The country’s technical and vocational training system, spanning the Higher Education Commission (HEC), National Vocational and Technical Training Commission (NAVTTC), and Provincial TEVTAs including various industry-linked bodies, remains fragmented and underperforming. Training is often detached from real industry needs. Technical institutions (more than 3500 public and private) continue to follow supply-driven programs rather than demand-led curricula. The absence of structured collaboration between training providers and employers means that graduates often lack job-ready skills.
The World Bank Update emphasizes the importance of aligning education and skills with technological change, especially the growing adoption of artificial intelligence (AI). About 15 percent of South Asian workers are in jobs that complement AI, and these workers already earn nearly 30 percent more than their peers. However, Pakistan’s digital readiness remains low due to weak infrastructure, unreliable electricity, and a shortage of skilled technicians and engineers. Unless training institutions adapt to the demands of automation and AI, Pakistan risks missing out on this productivity wave.
For this, the role of regulators and training institutions is central. The NAVTTC’s curricula still needs practical alignment with international certification standards, limiting the global recognition of Pakistani graduates. Pakistan’s overseas labour market, one of its lifelines, depends heavily on technical workers, yet the Pakistan Overseas Employment Promoters Association (POEPA) notes that the training provided to migrant workers does not meet the latest global standards. Without greater institutional and industrial collaboration, Pakistan will continue to export semi-skilled rather than fully-skilled human capital.
Another critical gap is the absence of a comprehensive apprenticeship framework and a centralized trainee data system either with NAVTTC or P-TETAs. Its availability could help monitor outcomes, link trainees to employers, and ensure transparency in certification. Moreover, regular Training of Trainers (ToT) programs are needed to keep instructors up to date, both in pedagogy and technical expertise in line with changing circumstances in the industry. The current system often overlooks trainer development, resulting in outdated teaching methods that fail to inspire or equip students for modern work environments.
Pakistan’s real transformation will not come from external loans or temporary reliefs, but from classrooms, workshops, labs, and training centres that prepare its youth to build, innovate, and lead in the modern world with modern technological skillset.
The World Bank Report also hints at a growing gender gap in South Asia’s workforce participation, a challenge acutely felt in Pakistan’s TVET sector. Awareness and accessibility for women remain limited, with social barriers and high fees under provincial TEVTAs discouraging participation from poor and marginalized communities. Without targeted outreach, scholarships, and flexible training models, the country will waste the potential of half its population.
Furthermore, Pakistan yet, requires a systematic Training Needs Assessments (TNA) mechanism that must align with national curricula to meet labour demands both nationally and internationally. Similarly, the absence of Tracer Studies makes it difficult to assess how many TVET graduates actually find employment or progress in their careers. Absence of tracer study will not give numerical and genuine data to decided the technical training as a recurring and actual need of the industry. Globally, these studies are standard practice in countries that effectively link education to industry. Incorporating them into Pakistan’s system would provide evidence-based guidance for policymakers and help bridge the gap between training and employment.
Artificial intelligence and global trade reform, as the World Bank notes, are reshaping the future of work. Countries that align their education, trade, and technology policies will lead this transformation. Pakistan must see its technical training ecosystem not as an auxiliary sector but as the backbone of its human capital development. Strengthening TVET institutions, ensuring quality assurance under TVET regulatory bodies and establishing industry-led governance structures can prepare the workforce to meet both domestic and international manpower needs.
South Asia’s story is no longer just about growth rates, it is about readiness for the future. The region has shown resilience in the face of crises, but its next chapter will be written by those who invest in people, not just projects. For Pakistan, that means shifting from relief to reform, from degrees to skills, and from isolation to integration.
The World Bank Update reminds us that every policy choice matters. Trade liberalisation, digital adoption, and technical education must move together. If Pakistan can align its training institutions with industry, empower its youth, especially women, and open pathways for global certification, it can reclaim its place as a competitive and confident player in the regional economy. Indeed, Pakistan has the capacity.