Introduction
In another post, I presented twenty-one large employers in Winnipeg (see A List of the Largest Employers in Winnipeg, Manitoba, Canada). I have posted similar statistics for other cities and have calculated the degree to which workers are exploited by some of those employers–to what extent workers work for free for the employer by producing the employer’s profit for free.
In this post, I will calculate the rate of exploitation of workers at Canada Life, one of the largest employers in Winnipeg, Manitoba, Canada. I do so for the year 2019 since that year was before Covid; later annual reports undoubtedly would distort the normal extent of exploitation of workers. When 2024 annual reports are published for employers in the future, I will then use such reports to calculate the rate of exploitation since it is likely that the effects of Covid will have diminished sufficiently to determine once again a more normal exploitative situation.
What is Canada Life? Its nature is set out in its Annual Report:
Canada Life was Canada’s first domestic life insurance company. … Today, Canada Life provides insurance and wealth management products and services in Canada, the United Kingdom (U.K.), Isle of Man and Germany, and in Ireland, through Irish Life.
The Nature of the Rate of Exploitation
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.
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).
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 various cities in 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 Canada Life Workers
To calculate the rate of surplus value, we need to divide “Third and Final Adjustment of Surplus Value (s) (Earnings before income tax)” by “Salaries and other employee benefits” or “variable capital (v).”
So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=3,349/1,986=169%.
This means that, in terms of money, $1 of wage or salary of a regular Canada Life worker results in $1.69 surplus value or profit for free. Alternatively, that means that for every hour worked that results in an hourly wage, a worker at Canada Life works around an additional 1 hour 41 minutes 82 minutes (101 minutes) for free for the Canada Life. It also means that, within an hour worked, a worker at Canada Life works 22 minutes to obtain her/his wage or salary and 38 minutes for free for Canada Life.
In a 7-hour (420 minutes) work day, Canada Life workers spend 2 hours 36 minutes (156 minutes) to obtain their wage for the day, and they spend 4 hours 24 minutes (264 minutes) for free for Canada Life.
In a 7.5-hour (450 minutes) work day, Canada Life workers spend 2 hours 47 minutes (167 minutes) to obtain their wage for the day, and they spend 4 hours 43 minutes (283 minutes) for free for Canada Life.
In an 8-hour (480 minutes) work day, Canada Life workers spend 2 hours 58 minutes (178 minutes) to obtain their wage for the day, and they spend 5 hours 2 minutes (302 minutes) for free for Canada Life.
In an 8.5-hour (510 minutes) work day, Canada Life workers spend 3 hours 10 minutes (190 minutes) to obtain their wage for the day, and they spend 5 hours 20 minutes (320 minutes) for free for Canada Life.
In an 11-hour (660 minutes) work day, Canada Life workers spend 4 hours 5 minutes (245 minutes) to obtain their wage for the day, and they spend 6 hours 55 minutes (415 minutes) for free for Canada Life.
In a 13-hour (780 minutes) work day, Canada Life workers spend 4 hours 50 minutes (290 minutes) to obtain their wage for the day, and they spend 8 hours 10 minutes (490 minutes) for free for Canada Life.
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).
It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, insurance workers, bank workers, wealth management workrs as well as 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 Canada Life to control their working lives in order to obtain surplus value or profit. (I leave the issue of how wealth management and insurance companies exploit workers as consumers to others more competent to deal with the issue; the point here is to focus on the exploitation of wealth management and insurancea workers as workers and not as consumers.)
Canada Life workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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. However, their power should not be exaggerated.
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–a minority–has the power to dictate to workers–the majority– 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?
The ideology of unions–that somehow they can produce a “fair contract” and “decent work” (see for example Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One: The Canadian Union of Public Employees (CUPE) and Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada))–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the 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 income before taxes and then make some adjustments on the basis of Marxian theory.
Initial Calculation of Profit or Surplus Value (s)
(In Canadian $ millions)
Income
Premium income
Gross premiums written $ 40,033
Ceded premiums ($5,237)
Total net premiums $ 34,796 [40,033-5,237=34,796]
Net investment income
Regular net investment income 4,474
Changes in fair value through profit or loss 5,672
Total net investment income 10,146 [4,474+5,672=10,146]
Fee and other income 3,324
Total income 48,266 [34,796+10,146+3,324=48,266]
Benefits and expenses
Policyholder benefits
Gross $ 34,623
Ceded (2,664) [numbers in parentheses are subtracted or negative)
Total net policyholder benefits 31,959 [34,623-2,664=31,959]
Changes in insurance and investment contract liabilities
Gross 7,515
Ceded (1,039)
Total net changes in insurance and investment and contract liabilities 6,476 [7,515-1,039=6,476]
Policyholder dividends and experience refunds 1,461
Total paid or credited to policyholders 39,896 [31,959+6,476+1,461=39,896]
Commissions 1,977
Operating and administrative expenses (note 28) 2,913
Premium taxes 481
Financing charges 50
Amortization of finite intangible assets 139
Earnings before income taxes (Initial calculation of profit or surplus value s) before adjustments 2,810 [48,266-39,896-1,977-2,913-481-50-139=2,810]
Initial Data Related to Salaries and Other Employee Benefits, or Variable Capital (V)
Note 28 is relevant, both for determining an adjustment to profits or surplus value (s) and “Salaries and other employee benefits” (variable capital, or v):
28. Operating and Administrative Expenses
Salaries and other employee benefits $ 1,986
General and administrative 803
Interest expense on leases 8
Amortization of fixed assets74
Depreciation of right-of-use assets 42
Total $ 2,913 [1,986+803+8+74+42=2,913]
Adjustments to Calculations
Why make any adjustments to the calculations used by the authors of the annual report? Marxian economics distinguishes between the actual situation–its essence, if you like–and appearances, which in a capitalist society often differ from the actual situation. Capitalist relations objectively distort the real nature of the kind of situation in which people find themselves. We need to adjust the calculations to transform the deceptive appearances into the actual situation. I will make adjustments according to the order of the above data, with adjustments taking firstly into account only the main categories and then some of the subcategories.
First Adjustment of Surplus Value (s) (Earnings before income tax)
Revenue
Total net investment income 10,146 Since the idea of calculating the rate of exploitation of particular employers is to determine the extent to which the particular employer exploits its workers, income derived from the exploitation of workers other than its workers should be excluded. However, in the case of insurance companies (like banks), a large proportion of the specific nature of the work involves a transfer of value from one sector to another rather than the production of new value and surplus value. Insurance companies derive a large proportion of their surplus value from such transfers; to exclude such transfers would exclude a large portion of the work that insurance workers perform. The inflow of money from this activity of Canada Life workers is a typical source of Canada Life’s revenue. Accordingly, I retain this category as part of “Earnings before income taxes” and surplus value (profit). The same could be said of the category “Fee and other income.” The annual report has this to say about the nature of this category:
Fee income includes fees earned from management of segregated fund assets, proprietary mutual fund assets, record-keeping, fees earned on administrative services only Group health contracts, commissions and fees earned from management services. Fee and other income is recognized on the transfer of services to customers for the amount that reflects the consideration expected to be received in exchange for those services promised.
Obtaining such fees seems to be a function of the work performed by regular employees at Canada Life. Accordingly, no adjustment is necessary.
Expenses
There is no explanation for the category “Commissions” as an expense in the annual report. It might be a form of increase in wages or salaries due to sales commissions (after meeting a cuota, perhaps), but without any further indication of its nature, I will not make any adjustements on that basis.
One of the subcategories of the category “Operating and administrative expenses” may need to be adjusted, namely “General and administrative” since, although the work of such workers accomplishes something (such as the recording of the transfer of property from one property owner to another)–their work may not change the value of what is produced if it does not change the use-value (properties) of what is worked on but contributes exclusively to transferring property from one person, corporation or organization to another. However, the annual report does not clarify the nature of such expenses, and therefore I will not use this subcategory for making adjustments.
Interest expense on leases 8
There is no elaboration of the nature of this expense in the annual report. This subcategory, on the other hand, seems to be an expense charged from borrowing to pay for leases. The source of interest expenses is surplus value. As I wrote 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). When they are expenses at the macro level of the class of employers and not just at the micro level of the particular employer, 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, $8 million needs to be added to “Earnings before income taxes.”
First Adjustment of Surplus Value (s) (Earnings before income tax)
2,818 [2,810+8=2,818]
Second Adjustment of Surplus Value (s) (Earnings before income tax)
Premium taxes 481
Referring to the main categories under expenses again, this category involves taxes, and taxes paid by employers to the government are derived from surplus value. Accordingly, it is necessary to add $481 million to “Earnings before income taxes.”
3,299 [2,818+481=3,299]
Third and Final Adjustment of Surplus Value (s) (Earnings before income tax)
Financing charges 50
Making an adjustment for this category follows the same logic as “Interest expense on leases.” Accordingly, it is necessary to add $50 million to “Earnings before income taxes.”
3,349 [3,299+50=3,349]
Additional Considerations that I Ultimately Disregarded
There is reference to “Share-Based Payments” in the annual report, with four subcategories: 1. Stock option plan; 2. Deferred Share Unit Plans; 3. Performance Share Units (PSUs); 4. Employee Share Ownership Program (ESOP).
Since there is insufficient information about how much, if any, certain employees (undoubtedly many of them senior managers or directors) received from these plans, I will simply ignore them.
The Rate of Exploitation of Canada Life Workers
To calculate the rate of surplus value, we need to divide “Third and Final Adjustment of Surplus Value (s) (Earnings before income tax)” by “Salaries and other employee benefits” or “variable capital (v).”
So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=3,349/1,986=169%.
This means that, in terms of money, $1 of wage or salary of a regular Canada Life worker results in $1.69 surplus value or profit for free. Alternatively, that means that for every hour worked that results in an hourly wage, a worker at Canada Life works around an additional 1 hour 41 minutes 82 minutes (101 minutes) for free for the Canada Life. It also means that, within an hour worked, a worker at Canada Life works 22 minutes to obtain her/his wage or salary and 38 minutes for free for Canada Life.
I have used various lengths of the working day as 7, 7.5, 8, 8.5, 11 and 13 because the length of the working day does vary:
Paid 7.5 but most many employees find themselves working extra hours just to meet deadlines.
You are able to choose your shift as a Claims Processor
7-3:30
7:30-4
8-4:30The standard office hours are 8:30am – 5:00pm but you are not restricted to these hours or required to show up during office hours.
8:30-4:30 Monday-friday
There was flexibilty in Schedule but it was pretty much 8am-9pm everyday.
My work at Great West Life starts at 8am and end time depends on the load of work (till the work due is done) Before we usually end at around 7pm. But recently, we are off on time. (5pm)
In a 7-hour (420 minutes) work day, Canada Life workers spend 2 hours 36 minutes (156 minutes) to obtain their wage for the day, and they spend 4 hours 24 minutes (264 minutes) for free for Canada Life.
In a 7.5-hour (450 minutes) work day, Canada Life workers spend 2 hours 47 minutes (167 minutes) to obtain their wage for the day, and they spend 4 hours 43 minutes (283 minutes) for free for Canada Life.
In an 8-hour (480 minutes) work day, Canada Life workers spend 2 hours 58 minutes (178 minutes) to obtain their wage for the day, and they spend 5 hours 2 minutes (302 minutes) for free for Canada Life.
In an 8.5-hour (510 minutes) work day, Canada Life workers spend 3 hours 10 minutes (190 minutes) to obtain their wage for the day, and they spend 5 hours 20 minutes (320 minutes) for free for Canada Life.
In an 11-hour (660 minutes) work day, Canada Life workers spend 4 hours 5 minutes (245 minutes) to obtain their wage for the day, and they spend 6 hours 55 minutes (415 minutes) for free for Canada Life.
In a 13-hour (780 minutes) work day, Canada Life workers spend 4 hours 50 minutes (290 minutes) to obtain their wage for the day, and they spend 8 hours 10 minutes (490 minutes) for free for Canada Life.
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).
It should be noted that I have used the verb “obtain” rather than “produce.” In Marxian economics, bank workers, as well as 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 Canada Life to control their working lives in order to obtain surplus value or profit. (I leave the issue of how wealth management and insurance companies exploit workers as consumers to others more competent to deal with the issue; the point here is to focus on the exploitation of wealth management and insurancea workers as workers and not as consumers.)
Political Considerations and Conclusions
Canada Life workers do not belong to a union. Would their becoming unionized turn their situation into one where they had a “fair contract” and “decent work?” I think not. 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 collective organizations of resistance against the power of particular employers. However, their power should not be exaggerated.
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–a minority–has the power to dictate to workers–the majority– 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?
The ideology of unions–that somehow they can produce a “fair contract” and “decent work” (see for example Fair Contracts (or Fair Collective Agreements): The Ideological Rhetoric of Canadian Unions, Part One: The Canadian Union of Public Employees (CUPE) and Fair Contracts or Collective Agreements: The Ideological Rhetoric of Canadian Unions, Part Three: Unifor (Largest Private Union in Canada))–needs, though, to be constantly criticized. Workers deserve better than the acceptance of such ideology by the left.
The Abolitionary 