The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada

The following applies to Air Canada workers before the COVID-19. The situation undoubtedly has changed since then since the airline industry has suffered disproportionately an economic crisis relative to some other industries (such as food production).

In another post, I presented the twenty largest employers in Canada according to level of profit (see A Short List of the Largest Private Employers in Canada, According to Profit). One of those employers is Air Canada, a privatized airline company (that used to be under public ownership).

I have tried to calculate the rate of exploitation of workers of Magna International in an earlier post (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.

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

I am going to begin with a conclusion, and then explain what it means and how it is calculated so that the reader understands where I am headed in the calculations:

For every hour worked that produces her/his wage, a worker at Air Canada works around an additional 42 minutes for free for Air Canada.

In a 6-hour work day, the worker produces her/his wage in about 3.5 hours and works 2.5 hours for free for Air Canada. Of course, during the time that the worker produces her/his own wage, s/he is subject to the power of management and hence is  also unfree (see, for instance, Management Rights, Part Four: Private Sector Collective Agreement, Ontario and Employers as Dictators, Part One).

In an 8-hour work day, the worker produces her/his wage in about 5 hours 36 minutes and works for 2 hours and 24 minutes free for Air Canada.

In a 12-hour day, the worker produces her/his wage in about 8 hours 24 minutes and works for free for 3 hours 36 minutes for Air Canada.

Of course, social democrats refer to this situation, in one way or another, as “fair.” They do so by using such terms as “fair contract,” “free collective bargaining,” “fairness,” “economic justice,” “good contract,” “decent work,” “companies paying their fair share of taxes” and similar rhetoric. Such rhetoric, rather than enlightening workers about their situation, actually hide it. The working class deserves better than this ideology.

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.

How I Calculated the Rate of Exploitation of Air Canada Workers

I calculated the conclusion as follows:

The income statement is broken into the following categories for 2019 (in millions of Canadian  dollars) :

Total revenue: $19,131
Total operating expenses: $17,481

Wages, salaries and benefits: $3,184
Aircraft fuel: $3,862
Regional airlines expense:

Aircraft fuel: $485
Other: $1,95

Depreciation and amortization: $1,986

Aircraft maintenance: $1,004

Airport and navigation fees: $990

Sales and distribution costs: $874

Ground package costs: $627

Catering and onboard services: $445

Communications and information technology: $397

Other: $1,671

Operating income: $1,650
Non-operating income (expense) [if it is income according to standard accounting practices, it has no parentheses; if it is an expense, it is within parentheses and needs to be subtracted–but see below): $125

Foreign exchange gain (loss): $499
Interest income: $164
Interest expense: ($515)
Interest capitalized: $35
Net financing expense relating to employee benefits: ($39)
Gain (loss) on financial instruments recorded at fair value: $23
Gain on debt settlements and modifications: $6
Gain (loss) on disposal of assets: $13
Other: ($61)

Income before income taxes: $1,775 (adding operating income and non-operating income (expense) together)

Some explanation of “interest capitalized” is in order. I have had difficulty in understanding the nature of “Interest capitalized.” As far as I can tell, interest that is normally paid and is an expense for the particular employer is treated, in Marxian economics, as part of surplus value because, at the macro level, it comes from the surplus value produced by the workers. Interest capitalized seems to be different since the interest charged on money borrowed for the purpose of the construction of fixed assets (with a specific interest rate attached to it) is “capitalized,” or not considered part of interest expenses until the construction is finished and the fixed asset is ready to use. This accounting distinction, however, from the macro point of view, is irrelevant since both interest expenses and interest capitalized are derived from the surplus value produced by workers (or appropriated from them in another industry). Accordingly, both interest expenses and interest capitalized should be added to the amount of “Income before income taxes” category.

The adjusted “Income before income taxes” therefore is: ($1775 +$515)=$2,290 (interest capitalization has already been added to income so there is no need to add it here).

Another necessary adjustment relates to the category and amount “Net financing expense relating to employee benefits: ($39)”. Pension-related expenses should probably form part of wages and hence should be shifted to “operating expenses.” This shift does not change the surplus value produced nor the “Income before income taxes” category; it just changes the distribution of expenses, from “Non-operating income (expense) to “Total operating expenses” by way of increasing the category “Wages, salaries and benefits” by $39; the category “Wages, salaries and benefits” are therefore $3,223.

The final calculations with adjustments before determining the rate of surplus value are:

Total revenue: $19,131
Total operating expenses: $17,520
Operating income: $1611
Non-operating income: $640
Income before income taxes: $2251

To calculate the rate of surplus value, we need to relate “Income before income taxes” to “Wages, salaries and benefits.” So, with the adjustments in place:, s=2251; v=3223. The rate of exploitation or the rate of surplus value=s/v=2251/3223=70%.

That means that for every hour worked that produces her/his wage, a worker at Air Canada works around an additional 42 minutes for free for Air Canada.

In a 6-hour work day, the worker produces her/his wage in about 3.5 hours and works 2.5 hours for free for Air Canada. Of course, during the time that the worker produces 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 8-hour work day, the worker produces her/his wage in about 5 hours 36 minutes and works for 2 hours and 24 minutes free for Air Canada.

In a 12-hour day, the worker produces her/his wage in about 8 hours 24 minutes and works for free for 3 hours 36 minutes for Air Canada.

I have used the lengths of the working day as 6, 8 and 12 because the length of the working day varies. According to one source:

As a customer service agent, you ll work from 3:00 am, 4:00 am and 5:00 am morning shifts, or 11:00 am, 12:00 pm, 2:00 pm. Afternoon shifts. Not sure about night shifts as I never work any of them. Part time is 6 hrs per day and full time can be 8-16 hrs. per day. You can exchange shifts, give away shifts, trade, pick or even parcial shifts. That part helps a lot when you need a day or 2 off.

Social-Democratic Rhetoric Neglects the Wider Context that Reveals the Exploitation of Workers

Of course, social democrats refer to this situation, in one way or another, as “fair.” They do so by using such terms as “fair contract,” “free collective bargaining,” “fairness,” “economic justice,” “good contract,” “decent work,” “companies paying their fair share of taxes” and similar rhetoric. Such rhetoric, rather than enlightening workers about their situation, actually hides it. The working class deserves better than this ideology.

By neglecting the fact of exploitation, other social democrats draw incorrect political conclusions. Thus, there are social democrats who try to claim that we need to reform the police rather than abolish it (see, for example, Reform versus Abolition of Police, Part Two) because workers have property. Some workers in the more developed capitalist countries do indeed have property (and fewer, of course, in the less developed capitalist countries), but they obtain that property by being exploited in the first place. If they understood that, would they support the police, whose main function is to protect the power of the employer to exploit them (and, only secondarily, to protect them and their own property)?

If the above calculations can be improved in any way, please comment on the above. I have been unable to find many guideposts about how to calculate the rate of exploitation or the rate of surplus value at the level of particular companies.

Social Democracy or Social Reformism and Trade Unionism: Their Social Limitations and Methodology, Part One

This will be a two-part post, with the second part being a brief focus on the inadequate methodology of social democrats and trade unionists. The radical left need to take measures against such inadequate methodology. I demonstrate briefly their inadequate methodology by referring to John Dewey’s philosophy of human nature and contrast it with one implicit social-democratic view that limits consideration to the immediate human body without taking into consideration the wider context within which the human body operates and lives.

The first part focuses on a discussion I had on Facebook a few weeks ago about the issue of a law passed in Ohio, the United States, which prevents girls who are raped (sexually abused) from having an abortion. I am certainly opposed to such a law, but it is insufficient to simply condemn such a law. It is necessary to understand how such a law could be formulated in the first place if we are to prevent the emergence of such laws (and worse) in the future. Social democrats and trade unionists, however, often merely react with gut feelings that are inadequate to the task of opposing on a wider basis the roots of such laws (and policies related to such laws).

Below I paste a copy of the conservation on Facebook. It is instructive in how limited the view of social democracy or social reformism and trade unionism really is and how ineffective as a consequence their responses will be. It is also instructive how such limitations arise from a typical method that social democrats or reformists and trade unionists use.

To be sure, social democrats or reformists and trade unionists may prevent, on occasion, the formulation and passing of such laws, but since they never address the roots of such laws, they will inevitably be incapable of eradicating the conditions for such laws to arise in the first place.

Tina Faibish, who is the main discussant below, is president of local 552 of OPSEU (Ontario Public Service Employees Union).

Here is the discussion, including my reply. After my reply, there was–silence.

chicagotribune.com


The story of Should 11-year-old girls have to bear their rapists’ babies? Ohio says yes .An impregnated preteen girl in Massillon, Ohio, has drawn national attention to the state’s new, highly restrictive abortion laws.


15Tina Robin Faibish and 14 others
18 Comments
Kristen Bones Disgusting
Raymadawn Hamilton Hell no!!!!!!!
Liz Seaward Ash No they should not…this is disgusting
Natalie Ashlyne Brooke Michener Wtf these law makers have to go who the hell would do that to someone
Fred Harris Undoubtedly this is amoral [should be immoral]–but so too is having to work for an employer. And yet how many among the left really find working for an employer to be “disgusting?”
Tina Robin Faibish Fred Harris come on are you kidding me, you can not look at these two issues as if the level of unjust is similar or comparable because they are not!
Fred Harris Of course, social democrats simply ignore the day-to-day exploitation and oppression of billions of workers (this is so trivial) when compared to the issue of “11-year old girls having to bear their rapists’ babies.” This shows the extent to which the social-democratic left have been indoctrinated into accepting the employer-employee relation–which treats human beings as things.

So “moral”! Such phrases as “decent work,” and “$15 and Fairness” hide the immorality of being treated as things.

The social-democratic left want to present themselves as morally superior, and yet they ignore the persistent and day-to-day subordination of billions of workers to the power of employers.

By the way, I do have a daughter. And she has been treated unjustly in various ways–including being treated as a thing by employers. I neither ignore the other ways in which she has been treated unjustly–nor the way in which she has been treated unjustly as an employee. The social-democratic left, however, do not consider it unjust to have to work for an employer. Their trite phrases, such as “decent work” express their own biases.
Laura Betty Fred Harris really?
Fred Harris Really what?
Fred Harris I have a blog on the issue of the employer-employee relation and the bankruptcy of the social-democratic left–theabolitionary
Tina Robin Faibish Fred Harris this is your MO and why no one is listening. Your comparison is completely off topic, and undermines the legitimacy and outrage as it relates to this discussion. In other words, as valid as your point may be, this is not the appropriate place to reference a comparison that clearly does not exist!
Fred Harris Let us see. There was a topic on Hydro. Social democrats made many unrelated comments on that topic. But if I make a comment in a supposed unrelated topic, it is considered inappropriate.

As for no one listening to me–social democrats automatically do not listen to me–that is to be expected. But some people from India, China, the UK, the US, Canada have gone on my blog.

As for my “MO”: the MO [modus operandi—a typical way of approaching the world or of doing something] of social democrats is automatically to ignore the issue of the power of employers as a class.

As for the topic of being forced to have babies after being raped–of course this should be opposed. My daughter accused the man (Juan Ulises) who lived with her mother of raping her. He was charged, but the charges were dropped because it was his word against hers. She maintains his guilt to this day–and I believe her. Is this on topic?

But social democrats simply ignore the issue of the power of employers which occurs every day at work. They like to consider themselves morally superior as I said above.

To paraphrase the mathematician, philosopher of education and philosopher of science, Alfred North Whitehead: it is very difficult to engage critically with something that you constantly experience every day as normal.

Feel free to delete me from the Facebook account.
Nina Keogh Tina Robin Faibish yup.
Fred Harris From Tina Robin Faibish “come on are you kidding me, you can not look at these two issues as if the level of unjust is similar or comparable because they are not!”

Children grow up to be adults–and in our society, things to be used by employers. According to the moral social democrats, their concerns take priority over the day-to-day treatment of billions of workers. 

Why are they not on the same level? Why focus on this particular occurrence in a particular state? That it is morally disgusting, I fully admit.

However, social democrats–by this person’s own admission–do not find the fact that billions of workers worldwide are treated as things on a daily basis to be of the same moral consideration. But what of the children of today? Is that not their fate tomorrow unless we stop permitting any person to be treated as a thing at work?

Is it moral to ignore the future of children?

Is it moral for the top 20 largest private employers to obtain $59 billion in profit (approximately $59 000 per unemployed person in Canada)? What of the children who suffer because of this?

Etc.

What of the over 200,000 Guatemalans who were butchered during the civil war (including children) in order to defend a system of employers?

Etc.

Or the “morality” of talking about employers paying their “fair share” of the taxes–after they have exploited workers in order to obtain the profits in the first place.

Yup.
Liz Seaward Ash Fred Harris one thing has nothing to do with the other…you’re delusional..
Fred Harris Note the lack of argument here and the lack of establishment of connections–and the resort to insults.

The issue of not permitting female children who are raped to have an abortion has to do with “property rights”–and that definitely has to do with the employer-employee relation and capitalism in general.

The struggle of women (and children) to control their own bodies forms part of a larger struggle to control our lives.

To say that they have nothing to do with each other is absurd–and shows the narrow-mindedness of the social-democratic left.

But that is to be expected–since the social-democratic left do not object to the general control of our bodies by employers but only particular forms. of it.

After all, do they not express such things as “decent work”–while simultaneously not criticizing the power of employers to control our lives at work in various ways. The social-democratic left like to “compartmentalize” our lives–separating out was is necessarily connected so that they can feel themselves morally–and intellectually–superior.

From the book Private Government: How Employers Rule Our Lives (And Why We Do Not Talk About It) (Ellizabeth Anderson–a woman, who probably would be considered delusional by the social-democratic left), pages 37-39

Communist Dictatorships in Our Midst

Imagine a government that assigns almost everyone a superior whom they must obey. Although superiors give most inferiors a routine to follow, there is no rule of law. Orders may be arbitrary and can change at any time, without prior notice or opportunity to appeal. Superiors are unaccountable to those they order around. They are neither elected nor removable by their inferiors.

Inferiors have no right to complain in court about how they are being treated, except in a few narrowly defined cases. They also have no right to be consulted about the orders they are given. There are multiple ranks in the society ruled by this government. The content of the orders people receive varies, depending on their rank. Higher- ranked individuals may be granted considerable freedom in deciding how to carry out their orders, and may issue some orders to some inferiors. The most highly ranked individual takes no orders but issues many. The lowest-ranked may have their bodily movements and speech minutely regulated for most of the day.

This government does not recognize a personal or private sphere of autonomy free from sanction. It may prescribe a dress code and forbid certain hairstyles. Everyone lives under surveillance, to ensure that they are complying with orders. Superiors may snoop into inferiors’ e-mail and record their phone conversations. Suspicionless searches of their bodies and personal effects may be routine. They can be ordered to submit to medical testing. The government may dictate the language spoken and forbid communication in any other language. It may forbid certain topics of discussion. People can be sanctioned for their consensual sexual activity or for their choice of spouse or life partner. They can be sanctioned for their political activity and required to engage in political activity they do not agree with.

The economic system of the society run by this government is communist. The government owns all the nonlabor means of production in the society it governs. It organizes production by means of central planning. The form of the government is a dictatorship. In some cases, the dictator is appointed by an oligarchy. In other cases, the dictator is self- appointed. Although the control that this government exercises over its members is pervasive, its sanctioning powers are limited. It cannot execute or imprison anyone for violating orders. It can demote people to lower ranks. The most common sanction is exile. Individuals are also free to emigrate, although if they do, there is usually no going back. Exile or emigration can have severe collateral consequences. The vast majority have no realistic option but to try to immigrate to another communist dictatorship, although there are many to choose from. A few
manage to escape into anarchic hinterlands, or set up their own dictatorships.

This government mostly secures compliance with carrots. Because it controls all the income in the society, it pays more to people who follow orders particularly well and promotes them to higher rank. Because it controls communication, it also has a propaganda apparatus that often persuades many to support the regime. This need not amount to brainwashing. In many cases, people willingly support the regime and comply with its orders because they identify with and profit from it. Others support the regime because, although they are subordinate to some superior, they get to exercise dominion over inferiors. It should not be surprising that support for the regime for these reasons tends to increase, the more highly ranked a person is.

Would people subject to such a government be free? I expect
that most people in the United States would think not. Yet most work under just such a government: it is the modern workplace, as it exists for most establishments in the United States. The dictator is the chief executive officer (CEO), superiors are managers, subordinates are workers. The oligarchy that appoints the CEO exists for publicly owned corporations: it is the board of directors. The punishment of exile is being fired. The economic system of the modern workplace is communist, because the government— that is, the establishment— owns all the assets,1 and the top of the establishment hierarchy designs the production plan, which subordinates execute. There are no internal markets in the modern workplace. Indeed, the boundary of the firm is defined as the point at which markets end and authoritarian centralized planning and direction begin. Most workers in the United States are governed by communist dictatorships in their work lives.

[End of quote]

If Ms. Anderson’s analysis is correct–why would it be surprising to limit the capacity of children (and their parents’) control over their bodies given the daily lack of control over the bodies of hundreds of millions of workers in the United States and billions worldwide (which the social democrats generally ignore)?

As I pointed out above, social democrats or reformists like to compartmentalize their discussions–a trick that enables them to omit issues that provide a wider context for the more narrow issues. They adopt what could be called a mechanistic philosophy to human society by assuming that human problems can be pigeon-holed into discrete parts. They look at society as if each area is distinct from another part. Aristotle, a Greek philosopher, however long ago argued that a hand, to be a hand, must be related to the human body. Social democrats, however, would like to have us believe that hands exists independently of the human body. They then accuse anyone who tries to widen the issue of illegitimately addressing issues that have nothing to do with these narrower issues. Indeed, note the reference to “delusional” by one of the social democrats. They glory in their own narrowmindedness and accuse all who fail to share in their narrowmindedness with delusions.

John Dewey, the philosopher of education, argued that acting intelligently, among other things, involves considering the wider context, or contextualizing the immediate situation that constitutes the immediate problem.

Social democrats or reformists generally refuse to consider the wider context of the class structure and class power of employers. They thereby propose, implicitly, that workers act unintelligently.

The fact that social democrats and radical leftists (such as Sam Gindin) fail to attack persistently the power of employers as a class entails the possibility of the rise of forces outside the workplace (such as the extreme right). After all, does not such right-wing politicians as Doug Ford (premier of Ontario) or Donald Trump glory in the dictatorship of employers? Do they not, like the social-democratic left, ignore such dictatorship? Do they not cover up such a dictatorship through rhetoric, like the social-democratic left?

One final point: Ms. Faibish posted the following on Facebook:

Workers at the Rainforest Cafe in Niagara Falls have been on strike for more than a month. What they’re fighting for proves the need for strong employment-standards legislation — and strong unions.

I made a comment by pointing out that it would have been helpful to give examples of locals that are strong unions. She did not provide any. Social democrats or reformists and trade unionists often use clichés without providing any support for such clichés. When someone questions their clichés, they then engage in–silence. This is not what the labour movement needs.

Rest assured that if you call into question the self-righteous left’s assumptions, they will engage in insults. That is to be expected. They refuse to face up to their own social limitations and the limitations of their own mechanistic methodology.