The Rate of Exploitation of Workers at Maple Leaf Foods, Or: How Unionized Jobs Are Not Decent or Good Jobs

Introduction

In another post I presented the twenty largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada). I also presented various posts where I calculated the rate of exploitation of such workers (see, for example, The Rate of Exploitation of the Workers of the Canadian Imperial Bank of Commerce (CIBC), One of the Largest Private Employers in Toronto and in Canada and The Rate of Exploitation of Workers at Magna International Inc., One of the Largest Private Employers in Toronto, Part Three, Updated, 2020).

In this post, I will calculate the rate of exploitation of workers at another large private employer in Toronto, Maple Leaf Foods.

What is Maple Leaf Foods?

The nature of Maple Leaf Foods is set out in its Annual Report:

About Maple Leaf Foods Inc.

Maple Leaf Foods Inc. is a producer of food products under leading brands including Maple Leaf®, MapleLeaf Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®, Swift®, Lightlife® and Field Roast Grain Meat Co.™ The Company’s portfolio includes prepared meats, ready-to-cook and ready-to-serve meals, value-added fresh pork and poultry, and plant protein products. The address of the Company’s registered office is 6985 Financial Dr., Mississauga, Ontario, L5N 0A1, Canada. The Company employs approximately 13,000 people and does business primarily in Canada, the U.S. and Asia.

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 in Toronto and Canada 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.

The Rate of Exploitation of Maple Leaf Workers

Final Calculation (Based on Adjustments) of Surplus Value (Profit), Variable Capital and the Rate of Surplus Value

The result of all of these adjustments is (in thousands of dollars and millions of dollars (for ease of calcuation):

To calculate the rate of surplus value, we need to relate “Adjusted Earnings net before income taxes” to “Adjusted total salaries and benefits.” So, with the adjustments in place:, s=141.744, and v=747.311. The rate of exploitation or the rate of surplus value=s/v=141.744/747.311=19 percent.

This means that, in terms of money, $1 of wage or salary of a regular Maple Leaf Foods worker results in $0.19 Cn surplus value or profit for free. Alternatively, that means that for every hour worked that produces her/his wage, a worker at Maple Leaf Foods works around an additional 11 minutes for free for Maple Leaf Foods. Or, for every hour worked, a worker at Maple Leaf Foods works 50 minutes that produces her/his wage and 10 mintues for free for Maple Leaf Foods.

Of course, during the time that the worker works to receive an equivalent of her/his own wage, s/he is subject to the power of management and hence is unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

In an 6 hour (360 minutes) work day, the worker produces her/his wage in 5 hours 3 minutes (303 minutes) and works 57 minutes for free for Maple Leaf Foods.

In an 7.5-hour (450 minutes) work day, the worker produces her/his wage in 6 hours 18 minutes (378 minutes) and works 1 hour 12 minutes (72 minutes) for free for Maple Leaf Foods.

In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 43 minutes (403 minutes) and works 1 hours 17 minutes (77 minutes) for free for Maple Leaf Foods.

In a 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 24 minutes (504 minutes) and works 1 hour 36 minutes (96 minutes) for free for Maple Leaf Foods.

In a 12-hour (720 minutes) work day, the worker produces her/his wage in 10 hours 5 minutes (605 minutes) and works 1 hour 55 minutes (115 minutes) for free for Maple Leaf Foods.

Political Considerations and Conclusion: Does the Existence of a Union and a Collective Agreement Abolish the Exploitation and Oppression of Workers?

Again, the rate of exploitation measures the extent to which workers work for free, producing all the surplus value and hence all the profit for employers. However, even during the time when they work to produce their own wage, they are hardly free. They are subject to the power and dictates of their employer during that time as well.

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 of private-sector workers in Canada, Unifor) 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?

Are the following examples of what union reps mean by a “fair contract?” “Good jobs?” “Decent work?” Other such cliches?

On page 6 of thecollective agreement between Maple Leaf Foods and Unifor Local 1090, we read:

ARTICLE 4 – MANAGEMENT RIGHTS

The management of the plant and the direction of the work force are the exclusive responsibility of the Company. The Company retains, but is not limited to, the right to determine the products to be handled, produced or manufactured, the methods and schedules of production, the number of personnel to be employed, processes and means of production or handling, the right to hire, retire, demote, classify, discipline, suspend, discharge, lay-off, assign duties, to make studies of and to institute changes to jobs and job assignments, promote and transfer employees and the right to make appropriate rules and regulations as required. The Plant Chairperson will be informed, whenever possible, five (5) working days prior to the posting of any new or revised rules or regulations. The Company agrees, however, to exercise those rights within this agreement.

Should workers not be discussing why management has these rights? Should workers not be discussing whether an unelected management should have such rights? Should workers not be discussing how to organize to abolish this dictatorship? Should workers not be criticizing any union rep who claims that a collective agreement somehow expresses a “fair contract?” A “good contract?” A “decent job?” A “good job?” All other such platitudes?

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 collective agreement–like any employment agreement between workers and employers–fosters the illusion that the workers are paid for the whole working day and hides the economic coercion behind the “agreement” or contract.

Should not the left be constantly exposing this? Is it? What do you think?

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.

Surplus Value (s) or Profit

(In thousands of Canadian dollars, unless otherwise specified)
Sales $ 3,941,545
Cost of goods sold 3,350,566
Gross profit $ 590,979 [3,941,545-3,350,566=590,979]
Selling, general and administrative expenses 457,681
Earnings from operations (before the following): $ 133,298 [590,979-457,681=133,298]
Restructuring and other related costs 13 11,004
Other expense 3,268
Earnings before interest and income taxes $ 119,026 [133,298-11,004-3,268=119,026]
Interest expense and other financing costs 32,031
Earnings before income taxes $ 86,995 [119,026-32,031=86,995]

The annual report provides two adjustments (“Decrease in fair value of biological assets” and “Unrealized loss (gain) on derivative contracts”) which I will not include for two reasons. Firstly, I lack the accounting background to determine whether they should be included or excluded.

Secondly, when I first srated this blog, I conceived it as a potentially collective effort as other Marxists would aid in developing an analytic tool for forging some kind of common policy on various issues and trying to gain sufficient power to implement them. This has hardly occurred. Efforts to determine whether to include or exclude certain categories from considertion require debate, but there has been no debating in general on this blog let alone on this specific topic.

I did search for the category”Fair value of biological assets” on the Net. I found such information as the following:

Biological assets are dealt with in International Accounting standards 41 (IAS 41). As per IAS 41, biological assets are any living plant or animal owned by the business. These are typically measured at fair values less selling costs.

There may be a logical reason for excluding such a category from consideration. Whether due to changes in the amount of constant capital (the capital invested in means of production, whether living or not) or changes in the value of constant capital that arise from outside the given production process will change the rate of profit but not the rate of exploitation. This situation appears to be the case here.

I also searched for the category”Unrealized loss (gain) on derivative contracts”:

Unrealized Gain (Loss) on Derivatives and Commodity Contracts

The net change in the difference between the fair value and the carrying value, or in the comparative fair values, of open derivatives, commodity, or energy contracts, held at each balance sheet date, that was included in earnings for the period.

Given the above characterizations of the two categories, what should be done with the following in the annual report?:

Decrease in fair value of biological assets(iii) 5,545
Unrealized loss (gain) on derivative contracts(iv) 6,515
Adjusted Operating Earnings $ 145,358 [133,298+5,545+6,515=145,358]

There is a note attached to one of these categories:

iv) Unrealized gains/losses on derivative contracts are reported within cost of goods sold in the Company’s 2019 consolidated financial statements

The above quote provides some proof that this category should, logically, be excluded in making adjustements since, otherwise, there would be double accounting–counting the same item twice (as part of “Cost of goods sold” and as a separate category).

Adjustments to Calculations

First Adjustment of Surplus Value (s) (Profit)

The category “Interest expense and other financing costs” 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 $ 32.031 million paid out as interest needs to be added back to $86.995 million, with the following result (in thousands of dollars, to make it consistent with the table above):

Earnings before income taxes $119,026

Another adjustment to surplus value (profit) will have to await until we consider the category “Variable capital (wages or salaries and benefits).

Variable Capital (Wages or Salaries and Benefits)

Salaries $738.0 million (excluding pension and other post-retirement benefits)
Defined benefit and defined contribution plans $30.1 million
Other post-retirement benefits expense $ 1.929 million
Total salaries and benefits $770.029 million [738+30.1+1.929=770.029]

Adjustment to Variable Capital (Wages or Salaries and Benefits) and Final Adjustment to Surplus Value (s) (Profit) (Earnings before income taxes)

The annual report has the following to say about the salaries and benefits of certain employees–managers:

Key Management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Company and/or its subsidiary, directly or indirectly, including any external director of the Company and/or its subsidiary.

Remuneration of key Management personnel of the Company is comprised of the following expenses:

Short-term employee benefits
Salaries, bonuses, and fees $ 13,640
Company car allowances 326
Other benefits 137
Total short-term employee benefits $ 14,103 [13,640+326+137=14,103]
Severance benefits 110
Post-employment benefits 805
Share-based compensation 7,700
Total remuneration $ 22,718 [14,103+110+805+7,700=22,718]

I have been unable to determine whether the total remuneration of management employees is included in the category “Salaries,” etc.: the annual report provides no explanation of whether total remuneration of management employees is or is not included in the more general category “Salaries,” etc.

I will assume that “Total remuneration” is included in the more general category “Salaries,” etc. because it is typical in annual reports to include them as part of total wages or salaries and benefits.

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.

Accordingly:

Adjusted Surplus Value (s) (Profit) Variable Capital (Total Wages or Salaries and Benefits) and Surplus Value (s) (Profit)

Adjusted Earnings before income taxes 141.744
Adjusted total salaries and benefits 747.311

The Rate of Exploitation of Maple Leaf Foods Workers

In an 6 hour (360 minutes) work day, the worker produces her/his wage in 5 hours 3 minutes (303 minutes) and works 57 minutes for free for Maple Leaf Foods.

In an 7.5-hour (450 minutes) work day, the worker produces her/his wage in 6 hours 18 minutes (378 minutes) and works 1 hour 12 minutes (72 minutes) for free for Maple Leaf Foods.

In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 43 minutes (403 minutes) and works 1 hours 17 minutes (77 minutes) for free for Maple Leaf Foods.

In a 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 24 minutes (504 minutes) and works 1 hour 36 minutes (96 minutes) for free for Maple Leaf Foods.

In a 12-hour (720 minutes) work day, the worker produces her/his wage in 10 hours 5 minutes (605 minutes) and works 1 hour 55 minutes (115 minutes) for free for Maple Leaf Foods.

I have used the lengths of the working day as 6, 7.5, 8, 10 and 12 hours because the length of the working day seems to vary:

At the corporate office, it’s roughly 9-5 but we work flexible hours.

6.45 am to 3.15pm( morning shift)
3.15 pm to 11.45 ( afternoon shift)
Shifts include a 15min payed break and a 30 min unpayed break

From 8.00am to 17.00pm

6am-3pm Monday – Friday

8 am to 4 pm is good

6:00am to 2:30pm 8 hour shift Mon to fr

De 8h00 à 12h00 le matin
De 13h00 à 17h00 de soir

Various Hours for different departments some run 24hr 7 days. 12hr continentals (maintenance) Others run three shift 7-330pm 3:00pm to 1130pm and 11-730am. (Logistics) Deli bolo hours range some start at 5am 6am 730am and afternoons 1pm 2pm 3pm 4pm and are all 8hour shifts. Raw and Primary also run similar schedules usually run a 20hr day.

Monday – Saturday 6 am to 230 pm

Some days are longer than others but basically 9-5.

The hours are 9am to 530opm

8 – 10h shifts

Six hours.

In the collective agreement between Maple Leaf Foods Port Perry, Ontario and Unifor Local 1090, from the period between June 1, 2020 and May 31, 2024, we read:

The regular work week for all employees will be defined as Monday through Saturday, and will consist of thirty-seven and one-half (37.5) up to forty (40) regular hours per week, (exclusive of a one half hour unpaid meal) based on a four (4) or five (5) day week, based on the needs of the business, at the discretion of the Company.

Political Considerations and Conclusion: Does the Existence of a Union and a Collective Agreement Abolish the Exploitation and Oppression of Workers?

Are the following examples of what union reps mean by a “fair contract?” “Good jobs?” “Decent work?” Other such cliches?

On page 6 of thecollective agreement between Maple Leaf Foods and Unifor Local 1090, we read:

ARTICLE 4 – MANAGEMENT RIGHTS

The management of the plant and the direction of the work force are the exclusive responsibility of the Company. The Company retains, but is not limited to, the right to determine the products to be handled, produced or manufactured, the methods and schedules of production, the number of personnel to be employed, processes and means of production or handling, the right to hire, retire, demote, classify, discipline, suspend, discharge, lay-off, assign duties, to make studies of and to institute changes to jobs and job assignments, promote and transfer employees and the right to make appropriate rules and regulations as required. The Plant Chairperson will be informed, whenever possible, five (5) working days prior to the posting of any new or revised rules or regulations. The Company agrees, however, to exercise those rights within this agreement.

Should not the left be constantly exposing this? Is it? What do you think?

If others have objections to excluding these

The Rate of Exploitation of Workers at Maple Leaf Foods, Or: How Unionized Jobs Are Not Decent or Good Jobs