A new report finds that Canada’s CEOs made record fortunes in 2021 while low pay and rising costs forced more workers to depend on food banks. According to a new report from the Canadian Centre for Policy Alternatives (CCPA), Canada’s top 100 CEOs saw their pay rise to “an all-time high.” All told, the ratio of CEO-to-worker pay has risen sharply from 104:1 in 1998, to 155:1 in 2009 to 227:1 in 2018 to 243:1 in 2021. That means, on Jan. 3, the first official work day of the year, these CEOs were paid the equivalent of the average workers’ salary ($58,800) by 9:43am.
Eroding wages, ballooning profits
In 2021, year-over-year inflation stood at 4.8 per cent. While wages “rose” just 3 per cent, amounting to a real cut, yet these executives saw their pay rise by 26 per cent.
While rising inflation, stagnant wages and persistent unemployment left many Canadian workers dependent on food banks, these bosses saw their bonuses and dividends rise on the back of ballooning corporate profits. As the report notes: “Never before have corporate profits captured so much of Canada’s economy. As profits hit record highs, CEO bonuses linked to profits also skyrocket.”
All told, Statistics Canada data finds that, while after-tax corporate profits hit a low of $287 billion in the second quarter of 2020, they rose 59 per cent, to $456 billion by the end of 2021. Profits further soared to $523 billion in the second quarter of 2022 and they remained elevated at $460.38 billion in the third quarter.
Where those profits, bonuses, and dividends come from
A review of the CEOs named in the report finds that the wealth appropriated by these bosses has come at the expense of working class livelihoods and, in some cases, working class lives.
Near the top of the list, for example, is Gildan Activewear CEO Glenn J. Chamandy. In 2021, Chamandy pocketed $14.546 million from $153 million in profit and $850.01 million in revenue. Gildan’s 2021 annual report outlines how their executives make their millions: They delegate managers to minimize “direct labour” costs (in production, transport and retail) and maximize “output”—that is, they make sure they’re getting the highest possible amount of work for the lowest possible pay. The same report warned Gildan’s shareholders that increases in wages, “workers’ compensation,” or talk of “fair labour standards” will threaten their returns.
Stelco Holdings CEO Alan Kestenbaum also pocketed $12.678 million in 2021, from almost $1 billion in profit and $4.12 billion in revenue. After years of job cuts, pension cuts, and sell-offs, the company has rebranded as a “low cost” supplier. And, heading into 2022, Kestenbaum pushed Stelco’s workers in Nanticoke to accept wage “increases” that lagged behind inflation to further expand his share of the profits.
George Weston Ltd’s CEO Galen G. Weston also made the top 100 CEO list, pocketing $10.6 million in 2021, from $709 million in total profit and $53.7 billion in total revenue. During the same year, his company also fought to claw back grocery store workers’ wages and benefits, leading to multiple substantial strike votes and hiked grocery prices.
Suncor Energy CEO M.S. Little also pocketed $11.8 million in 2021, from $1.553 billion in profit and $31.199 billion in revenue. Despite rising energy prices, the company’s search for “capital discipline” has meant intense cost-cutting, and speed-ups since the early 2010s. During that same period, at least 12 workers have been killed on the job, linked to an intense pressure for ‘shortcuts’ to meet rising quotas.
TC Energy Corp CEO François Poirier (who pocketed $9.813 million) and Imperial Oil CEO B.W. Corson (who pocketed $8.750 million) also raked in enormous profits—both from workplaces that are no safer.
Real estate speculators and landlords topped the list as well. Alongside CI Financial Corp’s Kurt MacAlpine and Onex Corp’s Gerald Schwartz, Tricon Residential CEO Gary Berman pocketed the most—$10.62 million. Tricon’s 2021 management report illustrates its winning strategy: “Rent increases,” cutting repairs, social assistance payments from struggling tenants, and evictions.
We can see how the massive compensation of these CEOs is directly tied to the suffering of the working class. This is not a coincidence
The bosses leading grocery, energy, manufacturing and retail monopolies made their fortunes not by working, but by hiring workers to produce goods and services and absorbing a portion of the value their workers created as profit. Many of these same executives further enlarged their fortunes by hiking prices. As the report observes: “While inflation may have been bad for workers, it was great for corporate profits.”
Profits, dividends, and bonuses from real estate investment and naked speculation, also listed in the report, also squandered wealth created by the working class, while also driving up the cost of living.
Together, both squeezed working people between low wages and rising costs. These executives are rich, in short, because workers are poor.
‘A few percentage points a year’
However, after detailing how these top executives grew their fortunes at workers’ expense, the CCPA’s policy suggestions fall short. None of the suggestions substantially threaten these capitalists’ power to cut wages and benefits, cut jobs, speed up work, hike prices, or expand their own bonuses and dividends.
According to the report: “While increasingly higher CEO pay isn’t something governments control, it doesn’t mean governments can’t tax it.”
The report suggests that exorbitant CEO pay should be curbed primarily by changes to tax laws. These include changes to stop firms from deducting executive pay over $1 million as business expenses and scrapping the capital gains loophole, which taxes dividends at half the rate of normal income. On the individual side, the report also suggests a more progressive income tax code and a wealth tax “of a few percentage points a year.”
It’s true that right-wing governments have spent decades ensuring that loopholes for executives, landlords, and business owners are balanced by regressive taxes that target workers and the poor. It’s why several studies have observed that Canada’s wealthiest one per cent actually pay a lower tax rate than the bottom ten per cent. Indeed, the Trudeau government itself even brags to prospective foreign investors that Canada has “lowest average overall tax rate” for business investment in the G7.
But these executives are paid from dividends and bonuses because they own and control a share of the firms themselves. Under capitalism, that ownership gives the shareholders and their representatives, who contribute nothing, the power to increase their wealth by cutting wages, speeding up work, cutting staff and hiking prices.
Merely changing the tax code leaves this power entirely intact.
The only big change promised by the report is that corporate boards might see “little point in paying outrageous amounts to CEOs if they are just going to have to pay it all back to the government in tax.” It is hard to see how this calculation will make the exploited, oppressed, evicted, and hungry less so.
‘Capital flows where it will get the best return’
Private ownership also allows these capitalists to evade taxes. As the report acknowledges: “The rich always threaten that they’ll move if rates increase.” While some firms may have more power than others to offshore or relocate, overall these firms and their investors respond to incentives. As another CCPA report notes, capitalists direct their money towards the lowest cost, lowest tax, and highest-return areas, and governments tend to assuage them for that reason.
While some tax changes may alleviate some of the worst effects of inequality, the capitalists will and do leave if their profits are significantly threatened. Fundamentally, you cannot control what you don’t own.
That means either that any changes must be very modest (“a few percentage points”) and barely affect the system’s glaring inequities, or they will be sabotaged.
This is more than an idle threat. Last year, a National Bank Study observed, Canada’s total private capital stock—the flow of money into Canadian industry—has been negative since 2009. National Bank chief rates strategist Warren Lovely further observed that Canada is seeing “an overall capital bleed,” as money moves from Canada to elsewhere, even as Prime Minister Trudeau invited the wealthy to effectively write their own tax laws.
Canada’s business owners are not paid 243 times more than the average worker because of the tax code. They are paid more because they own and control the wealth of society. As proposals for decreasing inequality, pricing schemes, labour regulations, tax laws and the like, fundamentally misunderstand the relationship between the capitalists and the government. These policies are a reflection of the class balance of forces in society, a reflection of the inequality that exists; they are not a means to end it.
Expropriate the parasites
Canada’s CEOs, as the report notes, appropriate nearly half a trillion dollars as profit every year, directing a large portion to their own compensation. These capitalists contribute nothing to the production of this wealth. These executives, in all likelihood, never, set foot in steel mills, warehouses, sweatshops or other sites of actual production. Every dollar of “profit” is a dollar of workers’ productivity that they are denied.
Over the past decade, these profits, dividends, and bonuses have grown while 1 in 4 workers use food banks, huge numbers face insolvency, and 437,620 depend on unemployment support.
Solving this mismatch requires more than tax proposals and spreadsheets. The owners of capital do not own and control the wealth of society because it is a rational way to organize the world’s resources; capitalism is maintained by exploitation and force. And, the capitalists will continue to rule until their wealth is seized and their power is taken away.
In the hands of the working class, the wealth currently squandered by these capitalists would be redirected to human need. A socialist plan of production would take the industries and wealth out of the hands of these capitalists, end corporate price-gouging on food, housing and heat, rehire the unemployed, and provide decent wages and safe working conditions for all.
