Criticism on Wage Fund Theory

  • There is no special fund which is particularly meant for the payment of wages to the workers, The wages are paid out of the national dividend which is a flow and not fixed like that of fund.
  • The theory is inadequate to explain the wage differences in different occupations,
  • The theory gives undue importance to the supply side. It makes wrong assumption that the demand for labour remains constant.
  • The theory assumes that labour is homogeneous but in fact it is heterogeneous.
  • The level of wages does not necessarily depend upon remuneratory capital. In newly developed countries, the capital available is generally less than the established countries but there the wages are relatively higher because of the greater productivity of each worker.
  • Wage fund is not only means through which wages can be paid because there are other sources which can be used to provide payment for labour.
  • The theory does not explain how the funds make the payments of labour rise and. how it can be measured.
  • The competition between employers can also lead to a rise in wage level and not necessarily because of a rise in wage fund or increase in capital accumulation.