Introduction
In three others posts I presented a list of some of the largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada), Calgary (see A Short List of the Largest Employers Based in Calgary, Alberta, Canada, Based on the Number of Employees) and Quebec (see A Short List of the Largest Employers in Quebec According to the Number of Employees). Metro was the largest employer in terms of the number of employees in Quebec.
What is Metro?
The nature of Metro is set out in its Annual Report:
COMPANY PROFILE
METRO INC. is a food and pharmacy leader in Québec and Ontario. As a retailer, franchisor, distributor, and manufacturer, the company operates or services a network of 950 food stores under several banners including Metro, Metro Plus, Super C, Food Basics, Adonis and Première Moisson, as well as 650 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy and Food Basics Pharmacy banners, providing employment directly or indirectly to almost 90,000 people.
I have tried to calculate the rate of exploitation of workers in various companies, including Magna International (see The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part One); Magna International is one of the largest employers in Toronto.
In this post, I calculate the rate of exploitation of Metro workers.
The Nature of the Rate of Exploitation
But what is the rate of exploitation? And why not use the usual rate of profit or the rate of return? The rate of profit is calculated as profit divided by investment. Since employers purchase both the means for work–buildings, computers, office supplies, raw material–and hire workers–we can classify investment into two categories: c, meaning constant capital, or the capital invested in commodities other than workers; and v, or variable capital, the capital invested in the hiring of workers for a certain period of time (wages, salaries and benefits).
The purpose of investment in a capitalist economy is to obtain more money (see The Money Circuit of Capital), and the additional money is surplus value when it is related to its source: workers working for more time than what they cost to produce themselves. The relation between surplus value and variable capital (or wages and salaries) is the rate of surplus value or the rate of exploitation, expressed as a ratio: s/v.
When the surplus is related to both c and v and expressed as a ratio, it is the rate of profit: s/(c+v).
In Marxian economics, you cannot simply use the economic classifications provided by employers and governments since such classifications often hide the nature of the social world in which we live. The rate of profit underestimates the rate of exploitation since the surplus value is related to total investment and not just to the workers. Furthermore, it makes the surplus value appear to derive from both constant capital and variable capital.
I decided to look at the annual report of some of the largest private companies (if they are available) in order to calculate the rate of exploitation at a more micro level than aggregate rates of surplus value at the national or international level. Politically, this is necessary since social democrats here in Toronto (and undoubtedly elsewhere) vaguely may refer to exploitation–while simultaneously and contradictorily referring to “decent work” and “fair contracts.” Calculating even approximately the rate of exploitation at a more micro level thus has political relevance.
Conclusions First
As usual, I start with the conclusion in order to make readily accessible the results of the calculations for those who are more interested in the results than in how to obtain them.
Adjusted Results
Adjusted earnings before income taxes (surplus value, or s) $1110.62 (in millions of Canadian dollars–in all calculations unless otherwise indicated)
Wages, fringe benefits and employee benefits expense: $966.4
The Rate of Exploitation of Metro Workers
To calculate the rate of surplus value, we need to relate “Adjusted earnings before income taxes” to “Wages, fringe benefits and employee benefits expense” So, with the adjustments in place:, s=1110.62; v=966.4. The rate of exploitation or the rate of surplus value=s/v=1110.62/966.4=115 percent.
That means that for every hour worked that produces her/his wage, a worker at Metro works around an additional 69 minutes (1 hour 9 minutes) for free for Metro. Alternatively expressed, for every hour worked, a worker at Metro works 28 minutes that produces her/his wage and 32 mintues for free for Metro.
I calculate the division of the working day according to various lengths of the working day. I use minutes rather and not just hours.
- For a 4 hour working day (240 minutes), Metro workers spend 112 minutes (1 hour 52 minutes) to obtain their wage for the day, and they spend 128 minutes (2 hours 8 minutes) in obtaining a surplus value or profit for Metro.
- For a 5 hour working day (300 minutes), Metro workers spend 140 minutes (2 hours 20 minutes) to obtain their wage for the day, and they spend 160 minutes (2 hours 40 minutes) in obtaining a surplus value or profit for Metro.
- For a 7 hour working day (420 minutes), Metro workers spend 195 minutes (3 hours 15 minutes) to obtain their wage for the day, and they spend 225 minutes (3 hours 45 minutes) in obtaining a surplus value or profit for Metro.
- For an 8 hour working day (480 minutes), Metro workers spend 223 minutes (3 hours 43 minutes) to obtain their wage for the day, and they spend 237 minutes (3 hours 57 minutes) in obtaining a surplus value or profit for Metro.
- For a 9 hour working day (540 minutes), Metro workers spend 251 minutes (4 hours 11 minutes) to obtain their wage for the day, and they spend 289 minutes (4 hours 49 minutes) in obtaining a surplus value or profit for Metro.
Of course, during the time that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and Employers as Dictators, Part One).
Most Metro workers belong to a union. This is what the annual report has to say about labour relations:
LABOUR RELATIONS
The majority of our store and distribution centre employees are unionized. Collective bargaining may give rise to work stoppages or slowdowns that could impact negatively the Corporation. We negotiate agreements with different maturity dates and conditions that ensure our competitiveness, and terms that promote a positive work environment in all our business segments. We have experienced some minor labour conflicts over the last few years but expect(3) to maintain good labour relations in the future.
Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?
If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not? Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected?
Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?
Is the following an example of what union reps mean by a “fair contract?”
Between METRO ONTARIO INC. C.O.B. AS METRO RIDEAU
and
UNIFOR AND ITS LOCAL 414 UNIFOR Union Canada
Effective from: February 18, 2017 to February 17, 2020ARTICLE 6: MANAGEMENT RIGHTS
6.01 The union acknowledges the right of the company to manage and operate its business in all respects, to direct the working force and to establish and maintain reasonable rules and regulations.
6.02 The union acknowledges further that it is the function of the company to hire, promote, demote, transfer and lay-off employees and to suspend, discipline and discharge employees for just and sufficient cause. Any exercise of these rights in conflict or inconsistent with the provisions of this agreement shall be subject to the provisions of the grievance procedure set forth in Article 4.
How does the existence of a collective agreement turn the exploitative and oppresive situation of workers into one where they have a “fair contract” and “decent work?” Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.
Workers and not just unions, however, cannot resist the power of the employers as a class unless workers organize as a class, and furthermore they cannot change the situation unless they themselves realize the limitations of their own local, regional and national organizations when faced with the power of the class of employers (and the government that supports them), teach that to their members and are open persistently to criticism from below. In addition, unless they start to organize as a class with the aim of eliminating the class power of employers, they will be subject to a back-and-forth movement of reform and counter-reform (see Anti-Neoliberalism Need Not Be Anti-Capitalist: The Case of the Toronto Radical John Clarke, Part Four: The Welfare State and Neoliberalism, or The Infinite Back and Forth Movement of Capitalism).
The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the social-democratic or social-reformist left.
Data on Which the Calculation Is Based
The calculation of the rate of exploitation is undoubtedly imperfect, and I invite the reader to correct its gaps. Nonetheless, the lack of any attempt to determine the rate of exploitation at the city level has undoubtedly reinforced social-reformist tendencies.
I initially try to outline how the annual report calculates the Earnings Before Income Taxes (EBIT) and then makes some adjustments according to Marxian theory and on the basis of certain quantiative assumptions.
Now, the calculation (in millions of Canadian dollars)
Sales 16,767.5
Cost of sales (13,438.8)
Gross margins 3,328.7 [16,767.5-13,438.8=3,328.7]
Operating expenses
Wages and fringe benefits (880.6)
Employee benefits expense (note 23) (85.8)
Rents and occupancy charges (529.2)
Retail network restructuring expenses (36.0)
Gain on divestiture of pharmacies 6.0
Others (481.6)
Total operating expenses 2007.2 (Add all the numbers in parentheses and subtract the 6.0 that is not=2007.2)
Since wages and benefits constitute variable capital (v), we should add them together:
Wages, fringe benefits and employee benefits expense: 966.4
Income net of operating expenses $1,321.5 [Gross margins-Total operating expenses=3,328.7-2007.2=1,321.5]
Depreciation and amortization
Fixed assets (note 11) (210.3)
Investment properties (note 12) (0.7)
Intangible assets (note 13) (75.4)
Total (286.4) (=210.3+0.7+75.4)
Income net of depreciation and amortization 1035.1 [1,321.5-286.4=1035.1]
Financial costs, net
Current interest (2.9)
Non-current interest (103.5)
Interests on defined benefit obligations net of plan assets (note 23) (2.1)
Amortization of deferred financing costs (2.9)
Interest income 7.8
Passage of time (0.2)
Total net financial costs (103.8) (numbers in parentheses mean that the numbers were deducted from income as they are considered an expense from a particular capitalist’s point of view; those without parentheses are income and need to be subtracted since they are income) (2.9+103.5+2.1+2.9+0.2=111.6; 111.6-7.8=103.8)
Earnings before income taxes 931.3 (1035.1-103.8=931.3).
The annual report, though, has “Earnings before income taxes” as 969.2. However, this number includes the following:
Gain on disposal of a portion of the investment in an associate 36.4 (note 10)
Gain on revaluation and disposal of an investment at fair value 1.5 (note 10)
Note 10 indicates the following:
During the first quarter of 2019, the Corporation finalized the disposal of the entire investment at fair value in Alimentation Couche Tard Inc. (ACT).
It cannot be assumed that the value of property disposed of has nothing to do with the exploitation of Metro workers; the profit obtained from their exploitation might have been reinvested in the acquisition of ACT in the first place.
However, since such possible exploitation would have occurred earlier, I will exclude it from the calculations since the issue is the current rate of exploitation in 2019.
36.4+15.=37.9; 969.2-37.9=931.3
Earnings before income taxes and before adjustments 931.3
Adjustments
Adjustments of Surplus Value (Profit)
In Marxian theory, it is necessary to question whether some expenses are expenses for both the individual employer and for the class of employers (and fractions of their class, such as those who live on interest); where there is a coincidence of expenses for individual employers and the class of employers, the expense is deducted from total revenue.
Adjustment of Interest
On the other hand, there are expenses that are expenses for the individual employer but are not expenses when looked at from the point of view of the class of employers; in such an instance, they are paid out from the surplus value produced or obtained by workers and are to be included in income before taxes. For example, interest is such a category.
As I wrote in another post:
As explained in another post, interest in many instances can be treated as part of the surplus value produced and therefore added to net income since, although from the point of view of the individual capitalist it is an expense, from the capitalist economy as a whole it is derived from the production of surplus value.
In addition, there are some so-called expenses that are allegedly salaries and other forms of income that are likely derived from surplus value; they have the form or appearance of wages or salaries but are really surplus value in disguise (such as the “salary” of CEOs). They need to be subtracted from expenses and added to “Earnings before income taxes.”
Since interest forms part of surplus value, the total interest paid, 111.6, needs to be added to “Earnings before incomes taxes.” Accordingly:
Temporality adjusted earnings before income taxes 1042.9 (931.3 + 111.6=1042.9)
Adjustment of Various Managerial Benefits
Various forms of income are available for senior managers and key employees that likely are derived exclusively from exploiting the rest of the workers. There are three categories in particular that apply here: stock option plan, peformance share unit plan and deferred share unit plan. Below, I quote from the annual report to show the nature of each plan as a plan for upper managerial employees of one form or another:
Stock option plan
The Corporation has a stock option plan for certain Corporation employees providing for the grant of options to purchase up to 30,000,000 Common Shares. As at September 28, 2019, a balance of 4,189,336 shares could be issued following the exercise of stock options.Performance share unit plan (PSU)
The Corporation has a PSU plan. Under this program, senior executives and other key employees (participants) periodically receive a given number of PSUs. The PSUs entitle the participant to Common Shares of the Corporation, or at the latter’s discretion, the cash equivalent, if the Corporation meets certain financial performance indicators.Deferred Share Unit Plan (DSU)
The Corporation has a DSU plan designed to encourage stock ownership by directors who are not Corporation officers. Under this program, directors who meet the stock ownership guidelines may choose to receive all or part of their compensation in DSUs.
Conveniently, the money for these managers is separately calculated for each category:
Stock options: $2 million; PSUs: $6.6 million; DSUs: $6.2 million. Total: $14.8 million. This must be added to Earnings before income taxes.
Temporarily adjusted earnings before income taxes 1057.7 (1042.9+14.8)
Adjustment for Rents and occupancy charges
As I wrote in another post:
Another expense category is also relevant for making adjustments–the category “Rents and occupancy charges.” The rent of buildings, like the rent of equipment, is an expense both at the level of the firm and at the level of the economy as a whole. However, in the case of occupancy, rent also includes the capitalized value of land, and this capitalized value of land is derived from surplus value (see Jorden Sandemose (2018), Class and Property in Marx’s Economic Thought: Exploring the Basis for Capitalism). Again, without further information, it is impossible to tell or determine the proportion that is paid for the rental of buildings and the rental of land. I will assume that 10 percent of rent is due to the exclusive ownership of land (a non-produced means of production).
This 10 percent is equal to $52.92 million and must be added to the category “Earnings before income taxes.” Accordingly:
Adjusted Results
Adjusted earnings before income taxes 1110.62 (1057.7+52.92)
Wages, fringe benefits and employee benefits expense: 966.4
The Rate of Exploitation of Metro Workers
To calculate the rate of surplus value, we need to relate “Adjusted earnings before income taxes” to “Wages, fringe benefits and employee benefits expense” So, with the adjustments in place:, s=1110.62; v=966.4. The rate of exploitation or the rate of surplus value=s/v=1110.62/966.4=115 percent.
That means that for every hour worked that produces her/his wage, a worker at Metro works around an additional 69 minutes (1 hour 9 minutes) for free for Metro. Alternatively expressed, for every hour worked that produces her/his wae, a worker at Metro works 28 minutes that produces her/his wage and 32 mintues for free for Metro.
According to a few people who have worked at Metro, the length of the working day is:
you will work up to 9 hrs or 4hrs
On a average day you work 8 hours
5-8hours/day
7 hours a day and 4 hours on weekdays.
I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes and not just hours.
- For a 4 hour working day (240 minutes), Metro workers spend 112 minutes (1 hour 52 minutes) to obtain their wage for the day, and they spend 128 minutes (2 hours 8 minutes) in obtaining a surplus value or profit for Metro.
- For a 5 hour working day (300 minutes), Metro workers spend 140 minutes (2 hours 20 minutes) to obtain their wage for the day, and they spend 160 minutes (2 hours 40 minutes) in obtaining a surplus value or profit for Metro.
- For a 7 hour working day (420 minutes), Metro workers spend 195 minutes (3 hours 15 minutes) to obtain their wage for the day, and they spend 225 minutes (3 hours 45 minutes) in obtaining a surplus value or profit for Metro.
- For an 8 hour working day (480 minutes), Metro workers spend 223 minutes (3 hours 43 minutes) to obtain their wage for the day, and they spend 237 minutes (3 hours 57 minutes) in obtaining a surplus value or profit for Metro.
- For a 9 hour working day (540 minutes), Metro workers spend 251 minutes (4 hours 11 minutes) to obtain their wage for the day, and they spend 289 minutes (4 hours 49 minutes) in obtaining a surplus value or profit for Metro.
It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, sales workers do not produce surplus value but rather transfer the surplus value already produced. This does not mean that these workers are not exploited capitalistically; they are used impersonally by the employer to obtain surplus value and a profit. Furthermore, things produced by others are used by employers such as Metro to control their working lives in order to obtain surplus value or profit.
Furthermore, some Metro workers do produce surplus value in that their labour involves transportation services; storage workers may perhaps also produce surplus value (this is a grey area for me).
Of course, during the time that the worker works to obtain an equivalent of her/his own wage, s/he is subject to the power of management and hence is also unfree during that time (see The Rate of Exploitation of Magna International Inc., One of the Largest Private Employers in Toronto, Part Two, Or: Intensified Oppression and Exploitation and Employers as Dictators, Part One).
Most Metro workers belong to a union. This is what the annual report has to say about labour relations:
LABOUR RELATIONS
The majority of our store and distribution centre employees are unionized. Collective bargaining may give rise to work stoppages or slowdowns that could impact negatively the Corporation. We negotiate agreements with different maturity dates and conditions that ensure our competitiveness, and terms that promote a positive work environment in all our business segments. We have experienced some minor labour conflicts over the last few years but expect(3) to maintain good labour relations in the future.
Do you think that these facts contradict the talk by the left and unionists of “fair wages,” “fair contracts” (see Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One for the rhetoric of the largest union in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized?
If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not? Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected?
Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?
Is the following an example of what union reps mean by a “fair contract?”
Between METRO ONTARIO INC. C.O.B. AS METRO RIDEAU
and
UNIFOR AND ITS LOCAL 414 UNIFOR Union Canada
Effective from: February 18, 2017 to February 17, 2020ARTICLE 6: MANAGEMENT RIGHTS
6.01 The union acknowledges the right of the company to manage and operate its business in all respects, to direct the working force and to establish and maintain reasonable rules and regulations.
6.02 The union acknowledges further that it is the function of the company to hire, promote, demote, transfer and lay-off employees and to suspend, discipline and discharge employees for just and sufficient cause. Any exercise of these rights in conflict or inconsistent with the provisions of this agreement shall be subject to the provisions of the grievance procedure set forth in Article 4.
How does the existence of a collective agreement turn the exploitative and oppresive situation of workers into one where they have a “fair contract” and “decent work?” Unions can limit exploitation and can control some aspects of their working lives, but in principle workers are things to be used by employers even with unions. This does not mean that a non-unionized environment is the same as a unionized environment. With unions that are independent of particular employers, that is to say, are real unions, there is an opportunity for workers to develop organizations of resistance against the power of particular employers.
Workers and not just unions, however, cannot resist the power of the employers as a class unless workers organize as a class, and furthermore they cannot change the situation unless they themselves realize the limitations of their own local, regional and national organizations when faced with the power of the class of employers (and the government that supports them), teach that to their members and are open persistently to criticism from below. In addition, unless they start to organize as a class with the aim of eliminating the class power of employers, they will be subject to a back-and-forth movement of reform and counter-reform (see Anti-Neoliberalism Need Not Be Anti-Capitalist: The Case of the Toronto Radical John Clarke, Part Four: The Welfare State and Neoliberalism, or The Infinite Back and Forth Movement of Capitalism).
The ideology of unions–that somehow they can produce a “fair contract” and “decent work”–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the social-democratic or social-reformist left.
The Abolitionary 