Introduction
In three others posts I presented a list of some of the largest employers in various cities (such as Toronto and Calgary) according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada), and A Short List of the Largest Employers Based in Calgary, Alberta, Canada, Based on the Number of Employees). In Edmonton, one of the largest private employers according to the number of employees is Stantec (see A Short List of the Largest Private Employers in Edmonton, Alberta, Based on the Number of Employees).
What is Stantec?
The nature of Stantec is set out in its Annual Report:
Engineering and design are at the core of what we do. At any given time, we’re working on tens of thousands of projects for thousands of clients in hundreds of communities. While we provide integrated expertise and services across the entire project life cycle, design is at the heart of it all.
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 Stantec 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 Variable Capital (Wages and Benefits) and Surplus Value (s) (Profit)
Adjusted total employee costs (variable capital, or v) 2704.9
Adjusted net income before taxes (surplus value or profit, s) 353.2
The Rate of Exploitation of Stantec Workers
To calculate the rate of surplus value, we need to relate “Adjusted net income before taxes” to “Adjusted total employee costs.” So, with the adjustments in place:, s=353.2, and v=2004.9. The rate of exploitation or the rate of surplus value=s/v=353.2/2004.9=13.1 percent.
That means that for every hour worked that produces her/his wage, a worker at Stantec works around an additional 8 minutes for free for Stantec. Alternatively expressed, for every hour worked, a worker at Stantec works 52 minutes that produces her/his wage and 8 mintues for free for Stantec.
In a 7.5 hour working day (450 minutes), Stantec workers spend 398 minutes (6 hours 38 minutes) to obtain their wage for the day, and they spend 52 minutes in obtaining a surplus value or profit for Stantec.
In an 8 hour working day (480 minutes), Stantec workers spend 424 minutes (7 hours 4 minutes) to obtain their wage for the day, and they spend 56 minutes in obtaining a surplus value or profit for Stantec.
In a 12 hour working day (720 minutes), Stantec workers spend 637 minutes (10 hours 37 minutes) to obtain their wage for the day, and they spend 83 minutes (1 hour 23 minutes) in obtaining a surplus value or profit for Stantec.
In a 16 hour working day (960 minutes), Stantec workers spend 849 minutes (14 hours 9 minutes) to obtain their wage for the day, and they spend 111 minutes (1 hour 51 minutes) in obtaining a surplus value or profit for Stantec.
Of course, during the time that the Stantec 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).
Do you think that these facts contradict the talk by the left and unionists of “”fair contracts” (see Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One and Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada) for this rhetoric of the largest unions in Canada, the Canadian Union of Public Employees (CUPE) and Unifor) , “fair wages” 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 workers’ 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? Do the left? 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?”
COLLECTIVE AGREEMENT Between Stantec Consulting Ltd. and Labourers’ International Union of North America (LiUNA), Local 3000 Expires December 31, 2023, Page 5:
ARTICLE 4 – MANAGEMENT RIGHTS
4.01 The Union acknowledges that the management of the Company’s operation and direction of the employees within this bargaining unit are fixed exclusively in the Company and without restricting the generality of the foregoing, the Union acknowledges that it is the exclusive right of the Company to:
a) make, enforce, and alter from time to time policies, procedures, regulations, and guidelines to be observed by employees.
b) maintain standards, order, discipline, and efficiency.
c) hire, assign, layoff, classify, direct, schedule, promote, demote, transfer, recall, suspend or otherwise discipline or terminate employees for just cause;
d) to manage the enterprises in which the Company is engaged, and without restricting the generality of the foregoing; to determine the kinds and locations of operations, equipment and material to be used; the work to be done; the methods and techniques of work; the schedules of work; number of employees to be employed; institute changes in jobs and job assignments; discontinue, reorganize, limit, combine, substitute any operation or part thereof; and, determine all other functions and prerogatives which shall remain solely with the Company save and except as specifically limited by the express provisions of this Agreement.
4.02 The Company’s exercise of these exclusive rights in one manner or another, or the non-exercise of such rights, in no way restricts the exercise of such rights in future.
4.03 It is agreed that the exercise of these rights in a manner which conflicts with the express provisions of this Collective Agreement may be subject to the grievance procedures contained herein.
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 net income before taxes and then makes some adjustments according to Marxian theory and on the basis of certain quantitative assumptions.
There are two different measures in the annual report: one according to the International Financial Reporting Standards (IFRS) and one according to adjusted revenue and expenses that are not according to IFRS; I chose the measures based on IFRS.
Now, the calculation (in millions of Canadian dollars)
Gross revenue 4,827.3
Less subconsultant and other direct expenses 1,116.0
Net revenue 3,711.3 [4,827.3-1,116.0=3,711.3]
Direct payroll costs 1,702.9
Gross margin 2,008.4 [3711.3-1702.9=2008.4]
Administrative and marketing expenses 1,433.6
Other (1.2)
EBITDA (Earnings before income tax, depreciation and amortization) 576.0 [2008.4-1433.6=574.8; 574.8+1.2=576] [Other (expenses), if in parentheses, needs to be added since it is actually a gain–that is what the parentheses mean]
Depreciation of property and equipment 58.2
Depreciation of lease assets 115.8
Amortization of intangible assets 66.9 1
Net interest expense 69.6
Net income before taxes 265.5 [58.2+115.8+66.9+69.6=310.5] [576-310.5=265.5]
Adjustments
Let us make adjustments according to the order of the categories listed above.
Adjustments of Wages and Benefits: Variable Capital (v) and, Correspondingly, Surplus Value (s) (Profit)
Variable capital (wages, benefits and other costs associated with exploiting workers) includes not only direct costs but what the annual report calls “indirect labour” costs. The following specifies in more detail such costs:
Employee Costs
Wages, salaries, and benefits 2,629.9
Pension costs 75.0
Share-based compensation 18.1
Total employee costs 2,723.0
Direct labor 1,702.9
Indirect labor 1,020.1
Total employee costs 2,723.0 [1,702.9+1,020.1=2723.0]
The annual report has this to say about direct and indirect labour:
Direct labor costs include salaries, wages, and related fringe benefits (including pension costs) for labor hours directly associated with the completion of projects. Bonuses, share-based compensation, termination payments, and salaries, wages, and related fringe benefits (including pension costs) for labor hours not directly associated with the completion of projects are included in indirect labor costs. Indirect labor costs are included in administrative and marketing expenses in the consolidated statements of income. Included in pension costs is $73.0 related to defined contribution plans.
I will not make any distinction between direct and indirect labour–although, if there were more detailed information, such a distinction would then become relevant in relation at least to marketing (for details, see the appendix to the post The Rate of Exploitation of Workers of Suncor Energy, One of the Largest Private Employers in Canada). However, the category “Share-based compensation” requires adjustment. This category involves three subcategories for 2019: restricted share units (RSUs), performance share units (PSUs) and deferred share units (DSUs). This income needs to be transferred to surplus value (profit) as I argued in another post (see The Rate of Exploitation of Workers at Bombardier, 2018, One of the Largest Private Employers in Quebec and in Toronto, Ontario: Or: How Unionized Jobs are Not Decent or Good):
It seems clear that the money allocated to the category is limited to select employees. … The reasoning for including some (if not all) of it as part of surplus value is that this compensation is not mainly for the coordination of the work of others but for the exploitation of others–it is pure surplus value.
The general nature of these payments is as follows:
Under the Company’s long-term incentive plan, certain members of the senior leadership teams are granted performance share units (PSUs) or restricted share units (RSUs) that vest and are settled after a three-year period. DSUs [deferred share units], PSUs, and RSUs are settled only in cash (cash-settled transactions).
The particular nature of RSU payments is as follows:
Restricted share units
During 2019, the Company granted RSUs to officers and employees at a fair value of $5.3, based on the trading price of the Company’s common shares at the grant date.
The particular nature of PSU payments is as follows:
Performance share units
Under the Company’s long-term incentive program, certain members of the senior leadership team may be granted PSUs. PSUs vest upon completing a three-year service condition. The number of units that vest is subject to a percentage that can range from 0% to 200%, depending on achieving three-year performance and market objectives. During the year ended December 31, 2019, PSUs ( were granted at a fair value of $11.6.
The particular nature of DSU payments is as follows:
Deferred share units
The directors of the board receive DSUs and annually elect to receive an additional fixed value compensation in the form of either DSUs or cash payment, less withholding amounts, to purchase common shares. During the year ended December 31, 2019, DSUs were granted at a fair value of $1.2 based on the closing market price of the Company’s common shares at the grant date.
If we sum up RSU, RSU and DSU payments, we have: 5.3+11.6+1.2=18.1 million–the figure above for the category “Share-based compensation.” This sum must be subtracted from “Total employee costs.”
Accordingly, this 18.1 million needs to be added to “Net income before taxes” and subtracted from “Total employee costs”:
Temporarily adjusted net income before taxes 283.6
Adjusted Variable Capital (Wages and Benefits)
Total employee costs 2704.9
Adjustments of Surplus Value (s) (Profit)
The category “Net interest expense” needs to be transferred from an expense to actual surplus value produced but paid out as interest. I explained the reasoning for this in another post:
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); in such a case, the expense is deducted from total revenue. 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.
Accordingly, the $69.1 million paid out as interest needs to be added to “Net income before taxes.”
Adjusted Variable Capital (Wages and Benefits) and Surplus Value (s) (Profit)
Adjusted total employee costs 2704.9
Adjusted net income before taxes 353.2
The Rate of Exploitation of Stantec Workers
To calculate the rate of surplus value, we need to relate “Adjusted net income before taxes” to “Adjusted total employee costs.” So, with the adjustments in place:, s=353.2, and v=2004.9. The rate of exploitation or the rate of surplus value=s/v=353.2/2004.9=13.1 percent.
That means that for every hour worked that produces her/his wage, a worker at Stantec works around an additional 8 minutes for free for Stantec. Alternatively expressed, for every hour worked that produces her/his wage, a worker at Stantec works 52 minutes that produces her/his wage and 8 mintues for free for Stantec.
According to a few people who have worked at Stantec, the length of the working day is:
Depends on the team – core hours 8-4/9-5
Long in the summer construction months i.e 12 hours plus but this is typical of outdoor Alberta construction
37.50 hours per week
7.5 hours.
7.5 hours minumum to as much as 16
I will calculate the division of the working day from the shortest to the longest in the above quotes accordingly. I use minutes rather and not just hours.
- For a 7.5 hour working day (450 minutes), Stantec workers spend 398 minutes (6 hours 38 minutes) to obtain their wage for the day, and they spend 52 minutes in obtaining a surplus value or profit for Stantec.
- For an 8 hour working day (480 minutes), Stantec workers spend 424 minutes (7 hours 4 minutes) to obtain their wage for the day, and they spend 56 minutes in obtaining a surplus value or profit for Stantec.
- For a 12 hour working day (720 minutes), Stantec workers spend 637 minutes (10 hours 37 minutes) to obtain their wage for the day, and they spend 83 minutes (1 hour 23 minutes) in obtaining a surplus value or profit for Stantec.
- For a 16 hour working day (960 minutes), Stantec workers spend 849 minutes (14 hours 9 minutes) to obtain their wage for the day, and they spend 111 minutes (1 hour 51 minutes) in obtaining a surplus value or profit for Stantec.
Of course, during the time that the Stantec 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).
Do you think that these facts contradict the talk by the left and unionists of “”fair contracts” (see Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One and Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada) for this rhetoric of the largest unions in Canada, the Canadian Union of Public Employees (CUPE) and Unifor) , “fair wages” 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 workers’ 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? Do the left? 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?”
COLLECTIVE AGREEMENT Between Stantec Consulting Ltd. and Labourers’ International Union of North America (LiUNA), Local 3000 Expires December 31, 2023Page 5:
ARTICLE 4 – MANAGEMENT RIGHTS
4.01 The Union acknowledges that the management of the Company’s operation and direction of the employees within this bargaining unit are fixed exclusively in the Company and without restricting the generality of the foregoing, the Union acknowledges that it is the exclusive right of the Company to:
a) make, enforce, and alter from time to time policies, procedures, regulations, and guidelines to be observed by employees.
b) maintain standards, order, discipline, and efficiency.
c) hire, assign, layoff, classify, direct, schedule, promote, demote, transfer, recall, suspend or otherwise discipline or terminate employees for just cause;
d) to manage the enterprises in which the Company is engaged, and without restricting the generality of the foregoing; to determine the kinds and locations of operations, equipment and material to be used; the work to be done; the methods and techniques of work; the schedules of work; number of employees to be employed; institute changes in jobs and job assignments; discontinue, reorganize, limit, combine, substitute any operation or part thereof; and, determine all other functions and prerogatives which shall remain solely with the Company save and except as specifically limited by the express provisions of this Agreement.
4.02 The Company’s exercise of these exclusive rights in one manner or another, or the non-exercise of such rights, in no way restricts the exercise of such rights in future.
4.03 It is agreed that the exercise of these rights in a manner which conflicts with the express provisions of this Collective Agreement may be subject to the grievance procedures contained herein.
What do you think?
The Abolitionary 