Wages, productivity and the rate of exploitation: Some concrete examples

First published at TheCommunists.net.

The latest edition of the ILO’s Global Wage Report contains a number of interesting figures which demonstrate how the bosses are offloading the consequences of the capitalist crisis on the shoulders of the working class. The study shows, among others, that the real wages are more or less stagnating while the capitalists force the workers to produce more and more commodities. [1]

Karl Marx explained in Capital Vol. 1 that the working day of a worker can basically be divided in two parts. One portion which he calls "necessary labour time” is “that portion of the working day during that portion of his day's labour in which he produces the value of his labour power." This is the labour time necessary to create the equivalent to buy food, pay the rent etc. – in other words to reproduce the living conditions of the workers and his or her family.

The other portion of the working day which Marx calls “surplus labour time” is that portion of the working day in which the worker “expends labour power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus value which, for the capitalist, has all the charms of a creation out of nothing.” [2]

From this, Marx concluded that the relationship between necessary labour and surplus labour creates the basis for the “rate of surplus value”, i.e. it reflects the share which the capitalist can appropriate from the worker. “Since, on the one hand, the values of the variable capital and of the labour power purchased by that capital are equal, and the value of this labour power determines the necessary portion of the working day; and since, on the other hand, the surplus value is determined by the surplus portion of the working day, it follows that surplus value bears the same ratio to variable capital, that surplus labour does to necessary labour, or in other words, the rate of surplus value” [3]

From this follows that such relationship between necessary labour and surplus labour reflects the degree of capitalist exploitation. “The rate of surplus value is therefore an exact expression for the degree of exploitation of labour power by capital, or of the labourer by the capitalist.” [4]

Stagnation of wages

It is hardly surprising that bourgeois economists are not interested in producing statistics which allow precise insight in the economic process of capitalist exploitation. However, this does not mean that such statistics are not useful to provide an understanding of the fundamental dynamic of capitalist economy.

The above-mentioned ILO report is useful to show the dire situation of the global working class. The authors emphasise that the economic slump in 2020 (which they wrongly attribute to the COVID-19 pandemic) destroyed many jobs. “According to ILO estimates, although the COVID-19 crisis destroyed many wage and salaried jobs during the first full year of the pandemic, with global wage employment dropping from 1.75 billion in 2019 to 1.69 billion in 2020.”

As a result, in nearly all countries around the world, wages have basically stagnated in the past years since the beginning of the Great Depression in late 2019. [5] In Table 1 we show the average real monthly wage growth for global wage labourers both with as well as without China.

It is important to note that these figures do not fully reflect the development of real wages for the mass of the global proletariat. This is for several reasons. First, the ILO includes into the category of wage labourers not only the working class but also sectors which are part of the waged middle class.

Secondly, such average figures do not reflect the increasing inequality within the wage earners. As we pointed out somewhere else, there is an increasing gap between the upper strata of the working class – the privileged and bribed strata of the labor aristocracy – and the mass of the proletariat. [6] Still, however, these figures reflect a clear general dynamic – the impoverishment of the world working class.

Table 1. Annual Average Real Monthly Wage Growth, Global, 2020-22 (in Percentage) [7]

                                                                                                   2020                    2021                     2022

Global                                                                                          1.5%                    1.8%                    -0.9%

Global (without China)                                                             0.9%                    0.9%                    -1.4%

In Table 2 we show the dynamic of real wage growth in 2020-22 in various regions. While certain differences exist – the massive decline in workers income in Africa is particularly striking – there is a general trend of stagnation of even decline.

Table 2. Annual Average Real Wage Growth, by Region, 2020-22 (in Percentage) [8]

Region                                                                                       2020                    2021                    2022

Africa                                                                                       -10.5%                -1.4%                    -0.5%

Arab States                                                                              0.8%                    0.5%                    1.2%

Eastern Europe                                                                       4.0%                     3.3%                    -3.3%

Northern, Southern and Western Europe                             0.0%                     0.9%                    -1.9%

Northern America                                                                  4.3%                     0.0%                    -3.2%

Asia and Pacific                                                                       1.0%                    3.5%                     1.3%

Latin America and the Caribbean                                           3.3%                  -1.4%                    -1.7%

The gap between productivity and real wages in increasing

The ILO study also provides interesting figures which helps to get an understanding of the long-term development of the degree of exploitation of the working class. Concretely, the authors show data for the years 1999-2022 which compare the development of labour productivity with that of real wages.

Unfortunately, the ILO presents such figures only for the so-called “high-income countries” which are mostly imperialist countries in Europe, North America, Japan, South Korea and Australia. Hence, the report leaves out that part of the world where the large majority of the global working class is living – China and the semi-colonial countries in Africa, Asia, Eastern Europe and Latin America.

However, even if the data are limited to the working class living in the imperialist countries, they provide a useful indicator of the increasing rate of exploitation. Concretely, the authors compare the development the labour productivity – which they calculate as GDP (the mainstream category for annual output) per worker – with that of real wages. They take the year 1999 as the starting point (1999 = 100). Again, one needs to take into account the limitations of these categories which we already pointed out above.

As Figure 1 shows, the gap between labour productivity and real wages has continuously increased since 1999. The ILO states “that, in real terms, labour productivity has increased more rapidly than wages over the past 22 years, with the former growing by 1.2 per cent annually and the latter by around 0.6 per cent annually.”

Figure 1. Average Real Wages and Labour Productivity in High-Income Countries, 1999-2022 (1999 = 100) [9]

This shows that average wages of workers in the imperialist countries increased only by meagre 0.6% per annum since the beginning of the century.

Furthermore, this shows that workers have produced an additional amount of capitalist value of which they received compensation only for half of it. The other half of this additional value was appropriated by the capitalists which they partly used for business expenditures and partly for their personal luxury. These figures provide a genuine impression about the massive increase of capitalist exploitation in the past quarter of a century!

Add to all this that workers represent the overwhelming majority of people in the labour process while the capitalists are only a numerically insignificant minority (usually only 1-3%). Still, this extremely tiny minority of parasites appropriates as much additional value as all workers in total!

Such process of exploitation will continue as long as the capitalists own the means of production. Hence, the working class must expropriate them and replace the profit system with that of a democratically planned economy in the service of the society.

Michael Pröbsting is a socialist activist and writer. He is the editor of the website http://www.thecommunists.net.

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