Introduction
In two others posts I presented a list of some of the largest employers in Toronto according to level of employment (see A Short List of the Largest Employers in Toronto, Ontario, Canada) and Quebec (see A Short List of the Largest Employers in Quebec According to the Number of Employees).
I have tried to calculate the rate of exploitation of workers in various companies for these two areas, including Air Canada (The Rate of Exploitation of Workers at Air Canada, One of the Largest Private Employers in Canada) and the Royal Bank of Canada (Banque Royale du Canada) (The Rate of Exploitation of the Workers of the Royal Bank of Canada (RBC), One of the Largest Private Employers in Toronto and in Canada).
Bombardier, the aircraft manufacturer, is also on both lists for Toronto and Quebec. I will calculate the rate of exploitation for this capitalist company not only for this reason. In the documentary Company Town, one worke Jennifer Akkermanr, who was going to lose her job at the General Motors (GM) plant in Oshawa when it was to close on December 18, 2019) indicated that she liked her job when working for GM but that she was going to work for Bombardier. I calculated, using fairly rough data, the rate of exploitation of GM workers in order to show that workers who claim that they enjoy their jobs at GM, in effect (even if they are unconscious of it) are claiming that they enjoy their exploitative jobs at GM.
I thought it appropriate to calculate the rate of exploitation of Bombardier workers to see to what extent the rates of exploitation of workers at GM and at Bombardier differed, if at all.
I used data from 2018 rather than 2019 to calculate the rate of exploitation of Bombardier workers because, in 2019, there seemed to be no calculable rate of exploitation since in 2019 there was an actual profit loss. Unless there are specific reasons for including abnormal years, it is better to calculate the rate of exploitation using more normal data. Besides, any company that operates at a constant loss by failing to exploit workers will cease to exist after a certain period of time.
Of course, if the rate of exploitation is calculated for a number of years, then losses need to be included. I have not found any books or articles that deal with how to handle such losses in calculating the rate of exploitation for such a year. It is, in any case, probably better to include such years in a multi-year calculation of the rate of exploitation in order to gain a more accurate view of the rate of exploitation in the medium- and long-term. Perhaps some readers can provide suggestions on how to do so.
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.
Surplus value (s) or Adjusted EBIT $969 million
Variable capital (v) or Adjusted Employee benefit costs $5,432 billion
To calculate the rate of surplus value, we need to divide “Surplus value (s) or Adjusted EBIT” by “Variable capital (v) or Adjusted Employee benefit costs.”
So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=969/5,432=18%.
That means that for every hour worked that produces her/his wage, a worker at Bombardier works around an additional 11 minutes for free for Bombardier.
In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 47 minutes (407 minutes) and works 1 hour 13 minutes (73 minutes) for free for Bombardier. 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 8.67 hour or 8-hour 40 minutes (520 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 19minutes (79 minutes) for free for Bombardier.
In a 9-hour (540 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 22 minutes (82 minutes) for free for Bombardier.
In an 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 28 minutes (508 minutes) and works 1 hour 32 minutes (92 minutes) for free for Bombardier.
In a 10.67 -hour or 10-hour 40 minutes (640 minutes) work day, the worker produces her/his wage in 9 hours 2 minutes (542 minutes) and works 1 hour 38 minutes (98 minutes) for free for Bombardier.
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 7 hours 21 minutes (610 minutes) and works 1 hour 50 minutes (110 minutes) for free for Bombardier.
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 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 (2019-2022) BETWEEN Bombardier Inc. hereinafter referred to as “the Employer” AND Unifor
ARTICLE 3 MANAGEMENT RIGHTS
3.01 No provision of the Collective Agreement shall be interpreted as limiting the Employer in any way in the exercise of its management functions. These functions are performed in a manner consistent with all the provisions of this Agreement. It is the function of the Employer to administer and manage the company and lead the workforce. Without restricting the generality of the foregoing, its rights and functions include:a) The responsibility for the management, operation, extension and curtailment of business and operations; the authority to direct, transfer, promote, demote, discipline and discharge employees for proper cause; the right to organize and supervise the work to be performed by the employees, to direct them in the course of their work, to maintain discipline, order and efficiency, to determine the products to be manufactured and their design, the methods, processes and means of manufacturing and operating, the type and location of machines and tools to be used, to determine production standards and the type and quality of materials to be used in manufacturing. Notwithstanding the above, these rights and functions do not prevent any employee who considers himself to have been unfairly treated to lodge a grievance in accordance with the provisions stated in 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?
Comparison of the Rate of Exploitation of Bombardier Workers to the Rate of Exploitation of Other Workers
The rate of exploitation of Bombardier workers is quite low relative to other workers (see the comparison of the rate of exploitaiton of various sets of workers in The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Although there are other factors or determinants in establishing whether a private-sector employer is viable or not, a relatively low rate of exploitation is certainly one possible indication of its possible bankruptcy; there is little wonder that in 2019 Bombardier faced a loss of profit. Its efforts to restructure itself as a consequence undoubtedly involved possible attempts to increase the rate of exploitation. Perhaps a comparison of the 2018 rate and the 2022 or 2023 rate of exploitation would be appropriate at some point to see if such restructuring is reflected in an increased rate of exploitation.
In relation to the rate of exploitation of General Motors (GM) workers, Bombardier workers are exploited less since the rate of exploitation of GM workers is 40 percent. Does that mean that Bombardier workers experience substantially more freedom than GM workers? Hardly. From the point of view of the continued existence of the workers at a certain standard of living (it does not mean that the standard of living that they receive is adequate). Higher rates of exploitation mean, among other things, that the need to work for a certain relative proportion of the working day is relatively unnecessary when compared to another set of workers in order to produce the value of the workers’ consumer goods (means of consumption).
A low rate of exploitation means that the particular employer may be threatened with bankruptcy–and hence the workers may be threatened with unemployment. From Nick Potts (2009), “Trying to Help Rescue Value for Everyone,” in pages 177-199, Critique: Journal of
Socialist Theory, Volume 37, Issue Number 2, 177-19 page 192:
Clearly if exploitation were to drop too low a crisis of profitability would occur.
This is hardly in their own immediate or short-term interests since they, in general need to work for an employer if they are to continue to live at a certain standard of living, This is a dilemma which private-sector workers and unions face (and, indirectly, public-sector workers and their unions) since attempts to change working conditions (such as the level of intensity or the length of the working day) and pay may well have negative effects on the rate of exploitaiton and the rate of profit, leading to bankruptcy. Workers cannot resolve such dilemmas without challenging the class power of employers–and unions cannot either, despite all the chatter of “fair contracts,” “decent wages,” “good jobs,” “decent work,” and other such cliches.
On the other hand, a high rate of exploitation does not mean that workers’s immediate interests are somehow met. In addition to having a greater proportion of labour or work going to the employer relative to the worker, the higher rate of exploitation may imply greater unemployment for workers since the issue of how this high rate of exploitation is achieved arises. If it arises due to massive increases in investment in constant capital relative to variable capital (and thereby increased in the productivity of labour), it may well occur that workers may become unemployed as the proportion of relative investment in c crowds out investment in v.
Nonetheless, in the short term, a higher rate of exploitation in a particular company may initially result in somewhat stable employment as the company may be able to compete more effectively against other capitalist companies. To that extent, Jennifer Akkerman’s reference to ‘loving her job’ may contain a grain of truth–short-term employment stability.
Alternatively, if the higher rate of exploitation occurs more or less throughout the economy, the workers who produce consumer goods (such as cars and trucks, as do GM workers), may find themselves unemployed as the commodities they produce remain unsold.
It is ironic that it may be in the workers’ short-term interests to want a high rate of exploitation in order to achieve some form of employment stability; that this may clash with their long-term interests does not change the situation. The dilemma of not being exploited at all and being unemployed, of being highly exploited with some employment stabiity and being little exploited (but still oppressed) with the threat of unemployment hanging over workers’ heads hardly makes for a “good job” or “fair contracts.”
It is time to challenge unions that persistently present, unconsciously if not concsiously, claims that they can somehow achieve any fair settlement, whether wages or working conditions, and whether through legislation or through collective bargaining and the resulting collective agreement. Thus, should not leftists persistently criticize such views as the following (
TORONTO, July 30, 2021 /CNW/ – Unifor Local 112 and 673 have reached a tentative agreement with Bombardier Aviation. “I would like to congratulate the Local 112 and 673 bargaining teams for their hard work and dedication throughout these negotiations,” said Jerry Dias, Unifor National President. “Reaching a settlement with Bombardier brings us one step closer to resolving the labour dispute at Downsview. Our union can now focus all of its efforts on reaching an agreement with De Havilland.”
The three-year agreements cover approximately 1,500 union members employed by Bombardier Aviation at the Downsview plant.
“We could not have reached a fair settlement that addresses the union’s key priorities at Bombardier without the support and solidarity of our members throughout the bargaining process and on the picket lines,” said Scott McIlmoyle, Unifor Local 112 President. [my emphasis]
Have you ever read any justification by union reps for such terms as a “fair settlement,” “fair contract,” “fair collective agreement,” ‘fair wages,” and so forth? If not, why not?
Should not union reps be obliged to answer such questions?
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.
In the case of Bombardier, I have had some difficulty in reconciling numbers related to interest. I will show this below.
But first, let us look at the general calculation:
Surplus Value (Profit)
EBIT: Earnings before interest and taxes (or: Profitability: Revenues-Costs or Expenses)
Revenues$ 16,236
Cost of sales 13,958
Gross margin 2,278 [16,236-13,958]
SG&A (Selling, General and Administrative Expenses) 1,156
R&D (Research and Development) 217
Share of income of joint ventures and associates (66)
Other expense (income) (58)
EBIT before Special Items (Earnings before Interest and taxes) (2) 1,029 [2,278-1156-217+66+58=1029]
Special items 28
EBIT 1001 (1029-28=1001)
Non-adjustment of EBT by Excluding Special Items from the Calculation
Clarification of the nature of the category “Special Items” in the Annual Report is as follows:
Special items
Special items comprise items which do not reflect our core performance or where their separate presentation will assist users in understanding our results for the period. Such items include, among others, the impact of restructuring charges and significant impairment charges and reversals.
There exists several items in this category. To go over each item and decide whether it should be excluded or included (without further information) seems an exercise for those with accounting skills–I invite them to provide a rational for including any or all of the items; I exclude the category in its entirety from the calculation.
Consequently, so far the EBIT is 1,001. Now, particular employers treat the need to pay interest as an expense–which it is from the point of view of the particular employer. Accordingly, there is an additional category: EBT, or Earnings Before Taxes:
EBT (Earnings before taxes)
Interest
Financing expense 712
Financing income (106) [This is actual income received and hence is in parentheses since it is not really an expense but the opposite and must be subtracted from “Financing expense”.)
Net financing expense 606 (712-106=606)
EBT (Earnings before taxes) (EBIT (1001)-Net financing expense (606)) 395
Adjustments
I will treat, theoretically, the two categories “Financing expense” and “Financing income” separately, and only then will I make the necessary adjustements.
Financing Expense
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.
For example, interest is such a category.
As I wrote in another post:
As explained in another post, interest in many instances can be treated as part of the surplus value produced and therefore added to net income since, although from the point of view of the individual capitalist it is an expense, from the capitalist economy as a whole it is derived from the production of surplus value.
Accordingly, it is EBIT and not EBT that should form the basis for determining the surplus value produced since interest is derived from surplus value–although it is an expense from the point of view of the particular employer.
Financing Income
The category “Financing Income” is income that is a result of, among other things, investment in securities. Since, as I explained in the post on the rate of exploitation of General Motors workers,
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.
Accordingly, the amount included in this category does indeed need to be subtracted from EBIT since it is surplus value arising from the exploitation of workers other than Bombardier workers.
Temporary Adjusted Earnings Before Income Taxes 895 (1001-106)
Further adjustments of EBIT must await the calculation of variable capital, or the total cost of producing the commodity labour power, or the capacity of labour power.
Variable Capital
Presumably, the following data form part of the category “Cost of Sales.”
EMPLOYEE BENEFIT COSTS
Wages, salaries and other employee benefits $ 4,919
Retirement benefits 464
Share-based expense 74
Restructuring, severance and other involuntary termination costs 46
Total $ 5,503
To explain the nature of the category “Share-based expenses.” it is first necessary to indicate the word form of the acronyms PSU, RSU and DSU:
PSU Performance share unit
RSU Restricted share unit
DSU Deferred share unit
The annual report indicates the nature of these:
SHARE-BASED PLANS
PSU, DSU and RSU plans
The Board of Directors of the Corporation approved a PSU and a RSU plan under which PSUs and RSUs may be granted to executives and other designated employees. The PSUs and the RSUs give recipients the right, upon vesting, to receive a certain number of the Corporation’s Class B Shares (subordinate voting). The RSUs also give certain recipients the right to receive a cash payment equal to the value of the RSUs. The Board of Directors of the Corporation has also approved a DSU plan under which DSUs may be granted to senior officers. The DSU plan is similar to the PSU plan, except that their exercise can only occur upon retirement or termination of employment.
It seems clear that the money allocated to the category is limited to select employees–unlike some annual reports, where it was unclear whether regular workers had access to share-based programs or not (see for example The Rate of Exploitation of Workers at WestJet Airlines Ltd.). 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.
If it was unclear whether the category was limited to those who exploit other workers, I merely calculated 10 percent of the total as forming surplus value, leaving 90 percent to form part of variable capital. In the case of Bombardier, though, the total amount of 74 million seems to be earmarked exclusively for key employees who exploit other workers.
Accordingly, it is necessary to subtract 74 from “Employee benefit costs” and add it to EBIT:
Adjusted EBIT or Surplus Value (Profit) 969 (895+74)
Temporarily Adjusted Employee benefit costs (variable capital, v) 5,429 (5,503-74)
Further Adjustment of Variable Capital (Wages and Benefits)
There is a list of items in the category “Other expense (income).” One of the items needs to be shifted to be included in the calculation of variable capital:
“Severance and other involuntary termination costs (including changes in estimates)” 3.
Since the shift is within the general category of “Expenses,” it does not affect the calculation of surplus value and hence profit; the category “Cost of sales” would increase by 3, from 13,958 to 13,961, and the category “Other expense (income) (58)” would decrease by 3, from (58) to 55, with the result that the EBIT would not change.
However, it does affect the calculation of variable capital and hence the rate of surplus value or the rate of exploitation. We now have sufficient information to calculate the rate of exploitation or the rate of surplus value.
Final Calculation (Based on Adjustments) of Surplus Value, Variable Capital (Salaries or Wages and Benefits) and the Rate of Surplus Value
The result of all of these adjustments is:
Surplus value (s) or Adjusted EBIT $969 million
Variable capital (v) or Adjusted Employee benefit costs $5,432 billion
To calculate the rate of surplus value, we need to divide “Surplus value (s) or Adjusted EBIT” by “Variable capital (v) or Adjusted Employee benefit costs.”
So, with the adjustments in place, the rate of exploitation or the rate of surplus value=s/v=969/5,432=18%.
That means that for every hour worked that produces her/his wage, a worker at Bombardier works around an additional 11 minutes for free for Bombardier.
In an 8-hour (480 minutes) work day, the worker produces her/his wage in 6 hours 47 minutes (407 minutes) and works 1 hour 13 minutes (73 minutes) for free for Bombardier. 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 8.67 hour or 8-hour 40 minutes (520 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 19minutes (79 minutes) for free for Bombardier.
In a 9-hour (540 minutes) work day, the worker produces her/his wage in 7 hours 38 minutes (458 minutes) and works 1 hour 22 minutes (82 minutes) for free for Bombardier.
In an 10-hour (600 minutes) work day, the worker produces her/his wage in 8 hours 28 minutes (508 minutes) and works 1 hour 32 minutes (92 minutes) for free for Bombardier.
In a 10.67 -hour or 10-hour 40 minutes (640 minutes) work day, the worker produces her/his wage in 9 hours 2 minutes (542 minutes) and works 1 hour 38 minutes (98 minutes) for free for Bombardier
In a 12-hour (720 minutes) work day, the worker produces her/his wage in 7 hours 21 minutes (610 minutes) and works 1 hour 50 minutes (110 minutes) for free for Bombardier.
I have used the lengths of the working day as 8, 8.67, 9, 10, 10.67 and 12 because the length of the working day varies. According to different sources:
Working hours are 8:00am – 4:40pm
12hr shifts
The hours that I worked were from 7:00 am to 7:00 pm Friday Saturday & Sunday and possibly coming in 2 hours early on Saturday & Sunday and or possibly staying late Friday thru Sunday depending whether or not we had a customer who had to leave early or late in the evening.
8-9 hours per day.
8 to 10 hours a day
I worked eight hours a day
The 2019-2022 collective agreement between Bombardier and Unifor Local 62 states:
ARTICLE 14 WORK SCHEDULES
14.01 The Employer determines the use of the different work schedules provided in article 14.08 according to the operational needs.
14.02 Unless otherwise stipulated in this Agreement, the normal work week is forty (40) hours.
14.03 The work week for employees on the first (1st) shift (schedule 1-A and 1-B) is of forty (40) hours distributed on five (5) consecutive days of eight (8) hours from Monday to Friday
…The work week for employees on the first (1st) shift (schedule 1-C and D) is of forty (40) hours distributed over four (4) consecutive days of ten (10) hours from Monday to Thursday or Tuesday to Friday
…
14.05 The work week for employees on the third (3rd) shift (schedule 3) is of thirty-six (36) hours, distributed on four (4) consecutive nights of nine (9) hours from Monday night to Friday morning, paid as forty (40) hours.
…
14.06 The work week for employees on the weekend day shift (schedule 4-A et 4-B) is of thirty-six (36) hours, distributed on three (3) consecutive days of twelve (12) hours, as follows: Saturday, Sunday and Friday Saturday, Sunday and Monday, paid for forty-two (42) hours.
…
14.07 The work week for employees on the weekend night shift (schedule 5) if of thirty-two (32) hours, distributed on three (3) consecutive evenings as follows: twelve (12) hours on Saturday and Sunday, and eight (8) hours on Friday [32 hours divided by 3=10.67 hours or 10 hours 40 minutes]. The employees are paid for forty (40) hours including the night premium.
Political Considerations and Conclusion
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 in Canada, the Canadian Union of Public Employees (CUPE)) and “decent work?” Do they ignore the reality of life for workers, whether unionized or non-unionized? If exploitation and oppression of workers is a constant in their lives, even if they are only vaguely aware of it, should this situation not be frankly acknowledged by their representatives? Do such representatives do so? If not, why not? Do workers deserve better than neglecting the social context within which they live and work? Should such problems be addressed head on rather than neglected?
Even if workers were not exploited, they would still be oppressed since they are used as things (means) for purposes which they as a collectivity do not define (see The Money Circuit of Capital). Does that express something fair? Management rights clauses (implied or explicit in collective agreements give management as representative of employers–and as a minority–the power to dictate to workers what to do, when to do it, how to do it and so forth–and is not the imposition of the will of a minority over the majority a dictatorship? (See Employers as Dictators, Part One). Is that fair? Do union reps ever explain how a collective agreement somehow expresses something fair? Is that fair?
Is the following an example of what union reps mean by a “fair contract?”
COLLECTIVE AGREEMENT (2019-2022) BETWEEN Bombardier Inc. hereinafter referred to as “the Employer” AND Unifor
ARTICLE 3 MANAGEMENT RIGHTS
3.01 No provision of the Collective Agreement shall be interpreted as limiting the Employer in any way in the exercise of its management functions. These functions are performed in a manner consistent with all the provisions of this Agreement. It is the function of the Employer to administer and manage the company and lead the workforce. Without restricting the generality of the foregoing, its rights and functions include:a) The responsibility for the management, operation, extension and curtailment of business and operations; the authority to direct, transfer, promote, demote, discipline and discharge employees for proper cause; the right to organize and supervise the work to be performed by the employees, to direct them in the course of their work, to maintain discipline, order and efficiency, to determine the products to be manufactured and their design, the methods, processes and means of manufacturing and operating, the type and location of machines and tools to be used, to determine production standards and the type and quality of materials to be used in manufacturing. Notwithstanding the above, these rights and functions do not prevent any employee who considers himself to have been unfairly treated to lodge a grievance in accordance with the provisions stated in 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?
The collective agreement fosters the illusion that the workers are paid for the whole working day. Workers may indeed receive more wages under certain circumstances, but that means that the cost of production of their capacity for working for an employer increases (perhaps due to an accelerated use of their labour power). This consideration, however, is irrelevant here since the total wages, salaries and benefits is what matters, and any increase in v due to such considerations are included in the data.
Comparison of Rates of Exploitation
The rate of exploitation of Bombardier workers is quite low relative to other workers (see the comparison of the rate of exploitaiton of various sets of workers in The Rate of Exploitation of Workers at WestJet Airlines Ltd.). Although there are other factors or determinants in establishing whether a private-sector employer is viable or not, a relatively low rate of exploitation is certainly one possible indication of its possible bankruptcy; there is little wonder that in 2019 Bombardier faced a loss of profit. Its efforts to restructure itself as a consequence undoubtedly involved possible attempts to increase the rate of exploitation. Perhaps a comparison of the 2018 rate and the 2022 or 2023 rate of exploitation would be appropriate at some point to see if such restructuring is reflected in an increased rate of exploitation.
In relation to the rate of exploitation of General Motors (GM) workers, Bombardier workers are exploited less since the rate of exploitation of GM workers is 40 percent. Does that mean that Bombardier workers experience substantially more freedom than GM workers? Hardly. Higher rates of exploitation mean that the need to work for a certain length of the working day is relatively unnecessary when compared to another set of workers from the point of view of the continued existence of the workers at a certain standard of living (it does not mean that the standard of living that they receive is adequate).
A low rate of exploitation means that the particular employer may be threatened with bankruptcy–and hence the workers may be threatened with unemployment. From Nick Potts (2009), “Trying to Help Rescue Value for Everyone,” in pages 177-199, Critique: Journal of Socialist Theory, Volume 37, Issue Number 2, page 192:
Clearly if exploitation were to drop too low a crisis of profitability would occur.
This is hardly in their own immediate or short-term interests since they, in general need to work for an employer if they are to continue to live at a certain standard of living, This is a dilemma which private-sector workers and unions face (and, indirectly, public-sector workers and their unions) since attempts to change working conditions (such as the level of intensity or the length of the working day) and pay may well have negative effects on the rate of exploitaiton and the rate of profit, leading to bankruptcy. Workers cannot resolve such dilemmas without challenging the class power of employers–and unions cannot either, despite all the chatter of “fair contracts,” “decent wages,” “good jobs,” “decent work,” and other such cliches.
On the other hand, a high rate of exploitation does not mean that workers’s immediate interests are somehow met. In addition to having a greater proportion of labour or work going to the employer relative to the worker, the higher rate of exploitation may imply greater unemployment for workers since the issue of how this high rate of exploitation is achieved arises. If it arises due to massive increases in investment in constant capital relative to variable capital (and thereby increased in the productivity of labour), it may well occur that workers may become unemployed as the proportion of relative investment in c crowds out investment in v.
Nonetheless, in the short term, a higher rate of exploitation in a particular company may initially result in somewhat stable employment as the company may be able to compete more effectively against other capitalist companies. To that extent, Jennifer Akkerman’s reference to ‘loving her job’ may contain a grain of truth–short-term employment stability.
Alternatively, if the higher rate of exploitation occurs more or less throughout the economy, the workers who produce consumer goods (such as cars and trucks, as do GM workers), may find themselves unemployed as the commodities they produce remain unsold.
From Guglielmo Carchedi and Michael Roberts, “The Long Roots of the Present Crisis: Keynesians, Austerians, and Marx’s Law,” in World in Crisis: A Global Analysis of Marx’s Law of Profitability. Edited by Carchedit and Roberts:
The question is whether an increase in the rate of profit due to a sufficiently high rate of exploitation is a step toward recovery.
A recovery presupposes the rise in the new value generated within the context of a rising ARP [average rate of profit]. A pro-capital distribution of value within the context of a falling ARP can revive the ARP, but this does not denote a recovery. This higher profitability hides the decreasing production of value and surplus value—that is, it hides the deterioration of the economy.
A more detailed way to approach this is is by considering the two basic sectors of the economy. Sector 1 produces means of production [Bombardier primarily belongs to this sector since it produces jets] , and sector 2 produces means of consumption [GM primarly produces in this sector–although a smaller proporition of vehicle production undoubtedly serves as means of production as well]. If one or both sectors innovate, usually the OCC rises and the ARP falls. All sectors realize tendentially the same, but lower, rate of profit. The capitalists might react to the lower ARP by lowering the level of wages, that is, by increasing the rate of exploitation across the board. This upsets the initial tendential equalization of the profit rates. But this equalization presupposes full realization [full sale of the commodities produced], which is impossible if stopping or reversing the fall in the ARP is to be achieved by raising the rate of exploitation.
Suppose wages are reduced by the same percentage, Δ symbol for a change in something], both in sector 1 and in sector 2, represented by the equation –Δv1 = –Δv2 [the percentage change decrease in variable capital is the same in both sectors 1 and 2]. Then, sector 1 gains Δs1 (corresponding to the fall in wages, –Δs1 [sic–which means that the quoter quotes exactly as written despite a possible error in the original: this should be the negative percentage change in v1]) [the percentage change increase in surplus value in sector 1 . Sector 2 on the one hand gains Δs2 (corresponding to the fall in wages, –Δv2) but on the other loses –(Δs1 + Δs2), the loss due to the unsold means of consumption to the workers both of sector 1 and of sector 2 [sector 2 loses because the levels of v1 and v2 have decreased with the result that they cannot purchase means of consumption equal to their loss]. On balance, sector 2 loses –Δs1, which is sector 1’s gain. Means of consumption for a value of Δs1 are unsold. This is overproduction in sector 2.
The ARP is unchanged (what is lost by one sector is gained by the other), but the two rates of profit differ: that in sector 1 has risen by Δs1, while that in sector 2 has fallen by the same quantity. The greater the fall in wages, the greater the fall of profitability in sector 2. This spells crisis in sector 2. Sector 1’s rate of profit rises. But this is not a sign of recovery in that sector. Sector 1’s rate of profit rises not because more value and surplus value is produced in it, but because surplus value is appropriated from sector 2 within the context of a hidden fall in the ARP. Wage cuts can, at most, postpone the crisis.
(I have some doubts about the theoretical accuracy of the above quote. The assumption of equal percentage increases in s and equal percentage decreases in v seems to assume a 100 percent rate of exploitation; if, however, the rate of exploitation is, say, 400 percent, s:v=4:1, so if s is 100, v is 25. If s increases in percentage terms by 25% to 125, a decrease in percentage terms of v by 25 percent is 6.25 (25 percent of 25 is 6.25). I will leave the issue to those who are better equipped in mathematics to determine its accuracy. Perhaps others can enlighten us by providing critical commentary.)
It is ironic that it may be in the workers’ short-term interests to want a high rate of exploitation in order to achieve some form of employment stability; that this may clash with their long-term interests does not change the situation. The dilemma of not being exploited at all and being unemployed, of being highly exploited with some employment stabiity and being little exploited (but still oppressed) with the threat of unemployment hanging over workers’ heads hardly makes for a “good job” or “fair contracts.”
Conclusion
It is time to challenge unions that persistently present, unconsciously if not concsiously, claims that they can somehow achieve any fair settlement, whether wages or working conditions, and whether through legislation or through collective bargaining and the resulting collective agreement. Thus, should not leftists persistently criticize such views as the following (
TORONTO, July 30, 2021 /CNW/ – Unifor Local 112 and 673 have reached a tentative agreement with Bombardier Aviation. “I would like to congratulate the Local 112 and 673 bargaining teams for their hard work and dedication throughout these negotiations,” said Jerry Dias, Unifor National President. “Reaching a settlement with Bombardier brings us one step closer to resolving the labour dispute at Downsview. Our union can now focus all of its efforts on reaching an agreement with De Havilland.”
The three-year agreements cover approximately 1,500 union members employed by Bombardier Aviation at the Downsview plant.
“We could not have reached a fair settlement that addresses the union’s key priorities at Bombardier without the support and solidarity of our members throughout the bargaining process and on the picket lines,” said Scott McIlmoyle, Unifor Local 112 President. [my emphasis]
Have you ever read any justification by union reps for such terms as a “fair settlement,” “fair contract,” “fair collective agreement,” ‘fair wages,” and so forth? If not, why not?
Should not union reps be obliged to answer such questions?
The Abolitionary 