Pakistan's Talent Crisis: Economic Challenges and Brain Drain

Pakistan faces a severe talent crisis as skilled workers leave due to economic despair and rising living costs.

### The Talent Crisis in Pakistan: A Growing Exodus Amid Economic Struggles
* 🇵🇰 Pakistan faces a severe talent crisis, with an increasing number of skilled workers **leaving the country in search of better opportunities**, reflecting a **deep-seated sense of hopelessness** among its populace.
* 📉 Over 230 million people reside in Pakistan, yet many express dissatisfaction with their economic conditions, as evidenced by a **notable decline in optimism about the country's future**.
* 💸 The cost of living has skyrocketed, with food prices rising **nearly 50% over the past two years**, making it increasingly difficult for families to meet **basic needs**.
* 🚪 Economic migration is not new to Pakistan, but the urgency of the current situation is underscored by professionals like Asad, who left a **stable job in Canada** to return home, only to find that **rising costs forced him to seek opportunities abroad again**.
* 📊 Inflation rates have made essentials like rice and bananas **prohibitively expensive**, while the devaluation of the currency has **compounded the financial strain** on the middle class.
* 🏦 The government is under pressure to improve tax collection, as Pakistan has **one of the lowest tax revenues in the region**, which has led to **widespread discontent and protests** over rising electricity and gas prices.
* 💼 The International Monetary Fund has mandated sweeping reforms as part of a **$7 billion loan agreement**, but these changes may **exacerbate the economic pain for citizens** in the short term.
* 🌍 Tech companies are attempting to retain talent by offering **higher bonuses and international opportunities**, but the long-term viability of these measures remains **uncertain amidst ongoing economic challenges**.

This is Pakistan, one of the most populous nations on earth. And to add to its list of existential challenges, it has a talent crisis. I've never seen in my 38 years so many people either leaving or wanting to leave. The hopelessness has gone so high. If you speak to anyone in Pakistan, they either know someone who has left Pakistan or someone who wants to leave Pakistan. This has been a longstanding pattern in Pakistan, but this time around, the outflow has been more to do with running from the problems of Pakistan. Skilled workers are now living in surging numbers, depriving the state of tax revenue it needs to avert national bankruptcy. I had to do three jobs at one point. I started feeling that my health was badly affected because on a lot of these days, I was working more than 15 hours a day and perhaps more than 80 hours a week. So why are so many professionals leaving Pakistan?

And what does that mean for the country's economic and political prospects? More than 230 million people call Pakistan home, making it the world's fifth largest nation by population. But ask them how they're doing? Most will say they're unhappy, at best. And it's getting worse. This gray line? It represents people's plunging optimism about Pakistan's economic outlook. While this one charts the corresponding surge of pessimism. Wage growth has not kept up to inflation, and everyone has become a bit more poorer now. It's become difficult to make ends meet. The rent expense of a middle-class income is now almost equal to the electricity bills of their households. Think about that for a moment. Energy bills each month equal to the price of the rent on your home. We've seen a sharp rise in food prices in the last two years. They're up almost 50% and they're sticky over the year now. Just look at the cost of milk.

The previously tax-exempt staple cost more in Karachi than it does in wealthy cities like these. Pakistan is a developing country that sends a lot of unskilled labor to many countries. This shows highly skilled professionals leaving Pakistan. Look how the numbers have grown over five years. And for sure, economic migration is not a new phenomenon in Pakistan. But people like Veqar Islam, who runs a tech company in Karachi, think this time it's different. There is a difference between people wanting to leave for better opportunity, or people desperate to leave because there is nothing left. I was one of the few young Pakistanis who had a career in North America, and I had a high-paying job in Canada back in 2015. But I had a passion to do something for my country, for my people. Asad returned home that year to the surprise of friends and family. But it wasn't to last. My wife was earning in Pakistan.

I was earning in Pakistan. But yet I think over time, both of our salaries lumped together, we could not afford the higher rental prices, the high fuel prices. That pushed us both to start seeking opportunities in the West. It reflects this trend. The number of visas being issued by the US to Pakistani citizens, many of whose skills are highly sought after. Asad applied for and received a scholarship to complete a PhD in the US, and moved to Massachusetts in 2023. The brain drain has always been there, but it's intensified in the recent times and I think it would continue to intensify in the future if the economic situation does not improve. So what exactly is that economic situation? These are rates of inflation for a dozen Asian economies. Now look at Pakistan. Consumer price gains have somewhat moderated this year. But the cost of essentials still hurts. Rice, tea and banana prices have more than doubled in the past two years.

Pakistan's currency has devalued by a third. That has made everything that is imported more expensive. The middle-class person cannot afford a basic car. Health care that is highly dependent on imports has become very expensive in Pakistan. The cost of living because of high food prices, high utility prices has squeezed a lot of disposable income. And Pakistan is a country where people don't tend to make big salaries in the first place. To be among the top 20% income earners in Pakistan, you need to have a salary of 64,000 rupees, which is $230 a month. I've spoken to a few people who are bankers, who have switched from a four-wheeler car to a motorcycle to save on transportation. And then there's the tax issue. Pakistan faces one of the lowest tax revenues in the region. And that's one of the things that's caught the attention of the IMF. In Pakistan, the issue is tax collection.

So please, for the people in Pakistan that can pay taxes, collect it from them. Pakistan has decided to increase electricity prices, gas prices, and it has also decided to increase taxes by a record 40%. This sparked anger across the country. Professionals say they're being taxed too much. Industrialists resent energy price hikes, and farmers think the government buys too little from them. This is on top of lingering discontent over the ousting of former Prime Minister Imran Khan in 2022. It's culminated in a tempestuous period of unrest and political instability, which some analysts have said needs to be stabilized before economic reform can be achieved. Meanwhile, the country's high corporate tax rate makes it harder to encourage businesses to invest locally and create attractive, high-quality jobs. Pakistan has a lot of under-taxed sectors. One is retail, and the other is agriculture. In these two sectors, again, you're seeing a Pakistan

is showing its more serious efforts to bring them in the tax net. This measure is part of Pakistan's latest agreement with the IMF. Pakistan is implementing sweeping reforms to cut costs and meet the terms of a $7 billion loan deal with the International Monetary Fund. The International Monetary Fund is known as the lender of last resort. Since the 50s, Pakistan has been one of the most regular customers. The Pakistani government has acknowledged the pain of its latest reforms on the population, but has said these structural changes are needed if the country wants to end its decades-long dependency on the IMF. But a longer-term solution will involve Pakistani businesses also being able to incentivize employees to stay with them and plug the middle-class brain drain. Some tech companies are going beyond their usual means by giving higher bonuses or giving a portion of the salary in dollars, rather than the local currency rupee. Our strategy in the last few years has been to go international.

and try to expand our business as fast as we can internationally, so that people see a pathway of going international through us. And hopefully, that will give them more incentive and motivation to stick around for the longest period of time with us and make a career. The question will be whether this is enough not only to retain talent but perhaps even to have it return. I think that option never goes out of the window, and it will always stay on the cards. It's my country, I love it, and despite the problems that I've mentioned, I would always want to do something for it. But I think in the foreseeable future, things don't seem to be improving as much. They haven't improved in the last year or so since I've been in the US. And I think this status quo would continue.

What’s Driving Pakistan’s Middle Class Brain Drain?

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Pakistan's Talent Crisis and Economic Challenges

Pakistan is facing a talent crisis, with a significant number of skilled workers leaving the country in search of better opportunities.

This outflow is depriving the state of crucial tax revenue, exacerbating the nation's economic struggles.

The rising cost of living, stagnant wage growth, and surging food prices are contributing to the growing unhappiness and pessimism among the population.

Economic Migration and Rising Costs in Pakistan

Karachi's living costs have surpassed those in wealthy cities, driving highly skilled professionals to leave the country.

The trend of economic migration from Pakistan is intensifying, with a significant increase in visa issuances to Pakistani citizens.

The country's economic situation remains challenging, with essential prices doubling in the past two years, further fueling the desire to seek opportunities abroad.

Pakistan's currency has devalued by a third, making imports more expensive and squeezing the middle class.

The country faces low tax revenues and has decided to increase electricity, gas prices, and taxes by 40%, leading to widespread anger and unrest.

High corporate tax rates and under-taxed sectors like retail and agriculture are hindering local business investment and job creation.

Pakistan's Efforts to Reform and Retain Talent

Pakistan is implementing major reforms to cut costs and meet the terms of a $7 billion loan from the IMF, aiming to reduce its long-term dependency on the organization.

Tech companies are offering higher bonuses and dollar salaries to incentivize employees to stay and combat the middle-class brain drain.

The effectiveness of these measures in retaining talent and encouraging return is uncertain, with the current status quo in the country showing little improvement.