PUNJAB has outsourced some 18,000 primary schools to the private sector, with plans to outsource more schools. The government is also thinking about outsourcing middle and high schools as well as colleges. Will this momentum encompass universities? Let us wait and see.
The outsourcing ‘movement’ is not restricted to educational institutions. Punjab has been doing this in the health sector as well. And the federal government has been talking of airports and ports in this context. Other provinces are not far behind. Sindh has significant public-private partnerships in health. Moving forward, it seems the scope and intensity of outsourcing are likely to increase.
But what is the benefit of outsourcing? It should be remembered that educational institutions are run by governments across the world. We have excellent government-run schools in developed and rich countries as well as in developing and not-so-rich countries. Education is a public good and is usually provided, funded and managed by governments across the world. So, what is the advantage of outsourcing education? Why is this slowly becoming an article of faith in Punjab?
One argument that is given is that it is cheaper for the government to pay the private sector than to provide and manage education through its own department. Punjab was paying Rs800 or so to the private sector when its own per-child expenditure in public schools used to be roughly Rs2,500 per month.
The answer lies not in outsourcing but in improving the quality of service and governance.
A few caveats should be kept in mind. First, over time, the cost of providing education has gone up a lot and the government has had to move to about Rs1,500 per-child transfer as the private sector could not provide educational services at Rs800 per month. Punjab is now thinking of introducing an incentive structure for private-sector providers, and this might raise the average transfer to around Rs2,000. So, over time, the cost saving might diminish.
Second, the cost advantage is overstated. The education department outsourced the schools but did not have mechanisms for effectively regulating them. It is in the process of developing these systems. The latter will include periodic checks on enrolments and attendance, quality checks on teaching, testing students to obtain valid proof of performance, and checks on infrastructure and other services being provided. This will require quite an elaborate system; doing this for 18,000 schools spread across the province is not easy, and it will have certain costs as well. So, it is evident that per-child expenditure will go up significantly.
Third, and perhaps most importantly, the difference in per-child cost is reflected in what the private sector pays teachers compared with the salaries and benefits government teachers receive. Government salaries are more than the minimum wage (around Rs45,000 per month) — in fact, usually significantly above it. Government jobs come with job security, pensions, the right to leave and other benefits. The private sector, on the other hand, pays anywhere from around Rs8,000 to Rs25,000 per month to teachers. Rural low-fee schools are generally at the lower end. Even in low-fee urban schools, salaries are in the Rs10,000-Rs15,000 range. And there are no other benefits or job security in the private sector.
The government is currently taking advantage of the fact that it is not enforcing the minimum wage law in private-sector schools. This is the main source of savings for the government as it outsources schools. But this has medium- to long-term implications.
When 10-year agreements with private schools end, will all these government schools revert to their previous status? Or have they been outsourced forever? If the government takes them back, it will either need new teachers or have to absorb private-sector teachers as government employees. If the schools have been permanently outsourced, the contingent liability will be significant if the female labour market changes.
The private sector hires anyone who can teach. Sometimes teachers are graduates, but many times they hold only an Intermediate degree. The private sector provides very little teacher training and support and has to deal with high teacher turnover as well. Will this help with the quality of education and improve learning outcomes? There will be implications for both the teacher labour market and teaching as a profession. On the one hand, governments want teachers to be professional (Sindh has introduced teacher licensing). On the other hand, outsourcing is making the teacher market more informal and unstructured. If salaries are around Rs20,000 or less, who in their right mind would want to choose teaching as a profession? Outsourcing and teacher professionalisation seem to be at odds, especially if the idea is to exploit cheap female labour for teaching.
Another argument given for outsourcing is that this government is not able to run schools and the private sector does it better. But this is just a poor argument. Governments run schools all over the world. If this is specific to Pakistan, does the government do a better job at policing and providing justice and security? If not, should these functions also be outsourced? Clearly not. The answer lies not in outsourcing but in improving the quality of service and governance.
The mantra of outsourcing is all the rage these days, especially in Punjab. And leading this momentum is education. With some 18,000 schools already outsourced, the initiative is no longer a pilot or a policy in the making. But the arguments for outsourcing seem weak. The cost advantage is overstated; the salary differential is not. However, relying on lower salaries will have significant medium- to long-term impacts on teacher labour markets and the teaching profession. The argument that the government is unable to manage schools or govern effectively stems from laziness and is a very lame excuse. Once the rage subsides, one hopes we will have time to evaluate the policy and its outcomes rigorously and to course-correct accordingly.
The writer is a senior research fellow at the Institute of Development and Economic Alternatives and an associate professor of economics at Lums.
Published in Dawn, July 31st, 2026
