Business Recorder Editorials 10th August 2026

The devolution illusion

EDITORIAL: More than 15 years after the 18th Constitutional Amendment fundamentally reshaped Pakistan’s federal structure, parliament has now been told that many federal ministries constitutionally meant to disappear never really did. They simply continued under different names.

At a time when the federal government speaks of austerity, right-sizing and administrative reform, the disclosure exposes something far more troubling than bureaucratic inertia. It reveals a state machinery that appears remarkably adept at preserving itself even after the constitution has ordered otherwise.

The figures are difficult to ignore. The subjects of 17 federal ministries were devolved to the provinces under the 18th Amendment, yet the federal administrative structure remained largely intact. Of more than 50,000 employees serving these ministries, fewer than 6,700 were transferred to provincial governments, while over 43,000 remained with the federation.

Even hundreds of employees from dissolved institutions and thousands serving in the secretariats of devolved ministries continued to remain under federal control. One is therefore entitled to ask whether devolution was fully implemented or merely administratively relabelled.

That question becomes even more important in light of recent government initiatives. Only days ago, the prime minister reiterated his commitment to right-sizing government by eliminating unnecessary posts and improving efficiency.

The interior minister has meanwhile reopened the debate over creating new provinces to bring governance closer to the people. Both initiatives rest upon the assumption that government must become leaner, more responsive and administratively effective.

Yet before creating new administrative structures or promising further reform, the state should first explain why reforms mandated by the constitution itself remain only partially implemented more than a decade-and-a-half later.

The implications extend well beyond administrative tidiness. The 18th Amendment was designed to redefine the relationship between the federation and the provinces by transferring responsibilities closer to the people. Whether one supported or opposed the amendment, its constitutional intent was clear. When institutions continue operating after their functions have been devolved, duplication becomes inevitable.

So do overlapping mandates, unnecessary expenditure, blurred accountability and bureaucratic confusion. Governments cannot credibly speak of efficiency while maintaining structures whose original constitutional purpose has already been transferred elsewhere.

Equally troubling is the apparent absence of institutional ownership. The Establishment Division maintains that employee adjustments were completed and that asset transfers fell within the Cabinet Division’s responsibility. The Cabinet Division, in turn, says evaluating the success of devolution is not part of its mandate and directs inquiries towards the Council of Common Interests.

Every institution appears able to explain why responsibility belongs somewhere else. Unfortunately, governance rarely improves when accountability becomes a relay race. Pakistan seldom lacks constitutional provisions, legislation or policy announcements. The real deficiency lies in implementation. Files move, notifications are issued and commissions complete their work, yet the intended reforms often remain unfinished long after official deadlines have passed.

Institutions survive under revised names, functions overlap, expenditure persists and governments eventually begin discussing another round of reforms before completing the previous one.

That institutional culture carries an obvious fiscal cost. Maintaining duplicate administrative structures while repeatedly urging citizens to accept austerity sends precisely the wrong message.

Taxpayers cannot reasonably be expected to shoulder heavier burdens while governments themselves struggle to implement efficiencies already required by the constitution. Administrative reform begins with demonstrating that the state is prepared to reform itself.

The government should therefore publish a comprehensive review of the implementation of the 18th Amendment, identifying which ministries continue to exist, under what legal authority they operate, what functions they currently perform and why those functions remain at the federal level. If constitutional devolution has been completed, the administrative structure should reflect that reality. If it has not, the public deserves to know why.

Constitutional amendments are not intended to become symbolic exercises. They exist to change how governments function. When ministries disappear only on paper while continuing in practice, the problem is no longer constitutional design. It is administrative unwillingness to carry out what the constitution already requires.

The profundity of AI challenge

EDITORIAL: A recent World Bank report on global development has highlighted that artificial intelligence (AI) could worsen Pakistan’s job-market crisis.

AI is expected to have a worldwide impact on employment, although its effects could differ across developed and developing countries. At the same time, it will create opportunities for those who take the right steps at the right time.

Companies and governments in the developed world are spending huge sums on AI, as reflected in the staggering $775 billion being invested by just five US companies. This investment will generate greater efficiencies, but it could also eliminate numerous entry-level jobs. Many fresh graduates are already struggling to find employment, and this challenge is only likely to accentuate.

This could also affect the growth of Home Remittances to Pakistan, as fewer educated and skilled workers may find employment opportunities in the West and the Middle East. Together, these regions account for the bulk of workers’ remittance inflows into Pakistan.

Over the past two decades, Pakistan has relied heavily on inward remittances to support its balance-of-payments position. Domestic economic productivity has declined relative to the rest of the world, resulting in weaker exports and growing imports in real terms. This gap has largely been filled by the continued strong growth in remittances.

With AI threatening jobs and the possibility of an economic slowdown in the Middle East due to the ongoing war, Pakistan’s external challenges are likely to increase over the medium term.

There is also a risk of job losses in the domestic market, both in export-oriented services and local businesses, as AI rapidly penetrates the economy and automated systems take over knowledge-based tasks. Pakistan’s fastest-growing export segment is IT and other business services, which have doubled to around $6 billion over the past few years.

However, much of this work consists of relatively basic tasks that Pakistan secures because of labour-cost arbitrage. AI is rapidly taking over such tasks, reducing the need for outsourcing. The cost of using AI is significantly lower than employing workers in developing countries, meaning this labour-cost advantage is diminishing. Low-end and entry-level roles are particularly vulnerable to automation.

Therefore, the growth of services exports based on low-skilled work is likely to slow. India is already bearing the brunt of this shift because of the size of its outsourcing industry. Pakistan and other developing countries may soon begin to feel the heat as well.

Meanwhile, SMEs in the domestic market are reducing headcounts and subscribing to AI tools to replace tasks previously performed by employees.

Pakistan’s authorities and technology companies must adapt to these rapidly changing global realities. They need to move up the value chain by developing expertise in more sophisticated areas and moving beyond call centres, basic coding and routine number-crunching jobs. However, this is easier said than done. According to industry experts, many of Pakistan’s large IT companies are not yet prepared to embrace this transformation.

Another opportunity is to use AI to improve the capabilities of underprepared high-school and college graduates by helping them acquire marketable skills. Instead of relying solely on lengthy degree programmes, young men and women could be selected through screening and provided with skills required by both local and international firms. AI could also be used to significantly improve the country’s healthcare and education systems, where traditional approaches have often failed.

In short, AI could offer more advantages than disadvantages to countries such as Pakistan, provided resources are deployed effectively. Otherwise, it could become a nightmare, as the country does not have sufficient buffers to withstand several years of economic and employment disruption.