Balochistan’s Skills Gap and CPEC Job Potential: A Human Capital Assessment

EXECUTIVE SUMMARY

• China-Pakistan Economic Corridor (CPEC) has been credited as the biggest infrastructure project in Pakistan, and it has created significant jobs in the country and yet, despite the presence of Gwadar Port and other portions of the Western Route, Balochistan has received only a small share of the economic and employment gains.
• The current evidence that is available indicates that even though Pakistani workers constitute the majority of the workforce in CPEC projects, local involvement in Balochistan is limited to low-skilled and informal employment while skilled and technical roles are mostly occupied by non-local and foreign workers.
• The gradual nature of the operationalization of Special Economic Zones additionally constrains local consumption of labor. With the approved SEZs, few of them have gone past the planning stage and industrialization and employment are minimal, especially in Balochistan.
• The critical limitation is the harsh and multi-sectoral skills shortage in the province, and a lack of skilled workers in mining, construction, port operations, energy, and industrial trades, in addition to poor TVET institutions, low enrollment, low female participation, and industry connections.
• The skills gap is not limited to CPEC-related industries; it is all-encompassing, in the agricultural sector, the water sector, renewable energy, minerals, and even health, which means that the problem of Balochistan is not project-specific, but structural and indicative of a larger problem in the human capital ecosystem.

• In conclusion, the study finds that CPEC presents opportunities, but Balochistan is not adequately positioned to take advantage. Devoid of focused, industry-oriented human capital, enhanced TVET, and local-hiring, the province will continue to be a transit region, and not an active recipient of national development, enhancing regional inequalities and restricting the comprehensive influence of CPEC.

China Pakistan Economic Corridor (CPEC) is the biggest infrastructure and connectivity project in Pakistan, and it is largely projected to contribute to the creation of employment opportunities and development of the region. Although, Gwadar Port and parts of Western Route are in Balochistan, the province received only a limited share of employment gains from CPEC. Though, national estimates have shown that the participation of the local population in CPEC projects has led to significant job creation in various projects, available sources indicated that local participation in the project has been almost limited to low-skill jobs, with the skilled and technical jobs mainly occupied by non-local or foreign residents. Survey-weighted household data also reveals that CPEC core and extended industries are disproportionately defined by low levels of education, high levels of youth concentration, and high dependence on informal wage employment, which makes the local population unable to acquire skilled CPEC-related jobs. The knowledge brief evaluates the level to which the current human capital capacities in Balochistan serve the labor demand in the CPEC-related sectors. The analysis indicates chronic skills shortages in the mining, construction, port, logistics, and emerging industrial sectors, which is characteristic of weak links in the systems of technical and vocational education and training (TVET), industry connectivity, and slow operationalization of Special Economic Zones (SEZs). Such limitations are also enhanced by poor flow of information and lack of organized local hiring systems. The statistics show that infrastructure expenditure by itself cannot produce inclusive employment results. Devoid of organizational, industry appropriate skills training and enhanced institutional capacity, Balochistan will remain as a transit area instead of being an actor of CPEC-based industrialization. These human capital gaps need to be filled to have equitable regional development and to achieve the long-term economic promise of CPEC.

INTRODUCTION

CPEC, entails massive investments in transportation, energy, ports and industrial infrastructure in Pakistan. Within this, Balochistan is strategically located with Gwadar Port, the Western Route, and few Special Economic Zones (SEZs). Regardless of such geographic and strategic centrality, CPEC has so far secured few employment benefits in the province, especially in the skilled and technical sectors

Availability of human capital rather than infrastructure is the main limitation to Balochistan. According to the CPEC-related projects, there are ongoing gaps in the local labor force, where there are insufficient technicians, machine operators, electricians, logistics staff, port workers, and mining professionals (Shah et al., 2017). In line with results of surveys indicating that the CPEC industries are dominated by youth, low education and informal jobs, skilled and semi-skilled jobs are often filled by workers in other provinces or foreign workers, and the locals are highly concentrated in low and informal jobs (Abbas & Rasool, 2021). The trends indicate that there have been chronic flaws in technical and vocational education and training (TVET) systems such as institutional coverage, obsolete curriculums, and poor responsiveness to industry demands (Muhammad & Ahmed, 2024).

This Knowledge Brief discusses why the workforce in Balochistan has not been incorporated into the job opportunities that are linked to the CPEC and what institutional and structural processes influence this situation. The brief presents a synthesis of the available evidence on the demand in labor, skills gaps, training capacity to create a picture of how local workers can better benefit through CPEC driven growth and help to have a more inclusive regional development.

CONCEPTUAL EXPLANATIONS OF LOCAL EXCLUSION FROM CPEC JOBS

The lack of involvement of Balochistan in CPEC employment can be best understood using three complementary theories. Human Capital Theory suggests that regions with low levels of education and skill levels are unable to take advantage of the new investments (Siddiq et al., 2021); this is reflected by the low level of human capital in Balochistan. Skills Mismatch Theory describes this coexistence between local unemployment and vacancies, CPEC needs technicians, operators, and engineers that the province cannot provide and, thus, employ non-local or Chinese workers (Abbas & Rasool, 2021).  Institutional economics further explains that weak provincial capacity and low bargaining power do not help Balochistan attain training pipeline and local hiring systems (Saleem, 2017). All these frameworks demonstrate that strategic infrastructure cannot create broad-based employment without effective skills, industries and institutions. These conceptual explanations align with recent household survey evidence, which shows that populations residing in CPEC core and extended industries exhibit systematically lower human capital and higher informal employment than the national average.

REVIEW OF EMPIRICAL EVIDENCE ON CPEC JOB GENERAION AND SKILLS GAP

Empirical studies indicate that CPEC has created numerous employment opportunities in Pakistan, but the allocation of the opportunities demonstrates a high level of regional and skill-based disparities. Initial CPEC projects generated approximately 52000 jobs in the sector related to road infrastructure (Zia & Waqar, 2018). Approximately 93 percent of labor employed in road projects was Pakistani, but these laborers were all pooled in low-skilled positions indicating low technical advancement opportunities (Rashid et al., 2018). To the contrary, Chinese or non-local employees occupied most engineering, electrical, mechanical, and project-management positions in energy projects, which proves the preference of employers towards technically trained workers that were able to match the specifications of the project (Abbas & Rasool, 2021).

Research, however; cautions that merely the presence of jobs does not in itself ensure the involvement of the local population particularly in those provinces where the training ecosystem is weak (Shah et al., 2017). Studies on Balochistan discover that despite the need of electricians, welders, machine operators, surveyors, port handlers and marine technicians in CPEC, the provincial workforce is deficient in the mentioned skills leading to excessive reliance on workers from other provinces and China (Saleem, 2017). It is evident that even though the development of ports and the construction of free zones have generated employment in logistics and services, almost all the jobs that require skills, crane operation, cargo handling and marine engineering, shipping documentation, are occupied by non-local employees (Achakzai et al., 2023).

SOCIOECONOMIC PROFILE OF CPEC CORE AND EXTENDED INDUSTRIES

To complement sectoral and project-level studies, this brief draws on microdata from the Labour Force Survey (LFS) 2024-25, which provides nationally representative information on employment characteristics, including a detailed major industry variable. Using this variable, two variables were further constructed: CPEC core industries and CPEC extended industries.

CPEC core industries capture sectors directly linked to CPEC infrastructure and connectivity. These include construction activities (construction of buildings, roads, railways, and utility projects), energy and utilities (electric power generation and transmission, gas distribution, steam and air-conditioning supply), and transport and logistics (road freight transport, passenger transport, storage, and transportation support services). These sectors represent the immediate infrastructure and operational footprint of CPEC. CPEC extended industries capture indirect and supply-side spillovers of CPEC activity. These mainly include wholesale and retail trade, vehicle sales and repair, fuel retail, food and consumer goods retail, and other market-facing services that expand due to increased construction demand, mobility, and economic integration generated by CPEC.

All descriptive results in this study are based on survey-weighted cross-tabulations using the official LFS population weights. These weights are used to make sure the results accurately represent the actual labor force, not just the people who happened to be included in the survey sample. Applying survey weights corrects for differences in how individuals are selected across provinces, industries, and demographic groups. As a result, the figures reflect population-level employment patterns rather than raw sample counts.