Study on the Impact of NMW on National Pay Agreements

Daniya General

Vol. 12, Jul-Dec 2021


This study looked at the impact of a nationwide minimum wage increase on Rajasthan’s unemployment and inflation rate. It used the National Bureau of Statistics 2019 collection to get the Federal Government's national minimum wage from 1980 to the present, as well as unemployment and inflation rates. To evaluate the data, NMW co integration models and ECM were used, with the unemployment rate as the dependent variable in version 1 and the inflation rate as the based variable in version 2. It became clear from the data that the national minimum wage has a huge and long-term impact on unemployment and inflation in the Rajasthan economy. At the average, a ten percent increase in the country's minimum wage resulted in an increase of one and a half. In both the short and long term, the unemployment rate increased by 3%. In addition, a ten percent increase in the country's minimum wage, on average, resulted in an increase in the inflation rate of 1.3% and 1.1 percent in the short and long run periods, respectively. While both the federal government and the Rajasthan Labour Congress recognise the negative effects of an excessive increase in the country's minimum wage on unemployment and inflation, this painting suggests that the government should pursue a consistent and moderate growth pattern with no labour union negotiation or call for a strike.

Back Download