Factors which directly affect or influence the rate of unemployment and wages are listed in the following order

  • Productivity: The higher the id production, the higher the level of wages and salaries, while the lower the level of production, the lower the level of wages.
  • Inflation: Inflation can induce employer to demand for increase in the level of wages.
  • Rising income: The rising incomes in key sectors of the economy (e.g. the public sector) can lead to general increase in wage limits.


For example, the federal government raised the minimum salary of federal workers to 6 7,500 and all other employers too had to adjust wages and salary upwards.

  • Demand for and supply of labour: If the aggregate demand for labour is low, here is the tendency for the level of wages to fall but if the aggregate demand for labour is high, the level of wages would rise.

  • Effectiveness of trade unions: Activities of trade unions through bargaining power can lead to increased wage level.
  • Technical changes: Technical changes such as improved and more effective process of production will lead to increase in productivity and ultimately higher wage rates.

  • Quality of labour: The quality of labour terms of skills or training determines (he level of wages or salary attracted. Highly educated and professionals workers attract higher level of wages than skilled workers.

  • Condition of the economy: When the economy is buoyant, workers enjoy high level of wages, but when the economy is recession, wages and salary levels fall.

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