The Criticism of The Subsistence Theory of Wage

The criticism of the subsistence theory of wage has been described on the following points.

• Unrealistic
• One-sided theory.
• Based on the long run only.
• Neglects the role of a labour union.
• The exploitation of labour.
• Neglects the efficiency of labour.
• Neglects the difference in wage.

Unrealistic

This theory has assumed that the supply of labour increases with an increase in the wage of the workers. This is unrealistic.

One-sided theory

This theory is one-sided. It has ignored the demand side only, the supply side has been overemphasized but demand and supply have equal importance in wage determination.

Based on long-run only

This theory is based on the assumption in the long run. It does not explain the determination of wages at a particular point in time or the short run.

Neglects the role of labour union

At present labour unions are establishing for the welfare of workers. They try to increase the wage and they do not say the wage goes down. So this theory has ignored the inflation of trade unions on wages.

Exploitation of labour

According to this theory, labourers are paid only the amount which is equal to their subsistence level. It ignores the welfare of labour.

Neglects the efficiency of labour

According to this theory, even an increase in the efficiency of workers cannot increase their wages above subsistence level. Hence the theory concludes that labour conditions cannot be improved. But this view is not correct.

Neglects the difference in wage

Workers get different inefficiency, working hours, place, and nature of work and so on. As the theory cannot explain the wages of differential, so it seems to be unrealistic.