McDonald's, KFC, and Pizza Hut franchises in Guangdong have recently been criticized for paying their part-time Chinese employees just US$52 cents per hour, 40 percent less than local statutory minimum wage requires. The discovery has resulted in public outcry and media attention throughout China.
McDonald's, KFC to Establish Unions
McDonald's and KFC, both of which have been heavily criticized recently for underpaying their part-time workers in Guangdong, are to set up trade union branches across the province.
Speaking yesterday, Kong Xianghong, vice-chairman of the Guangdong Provincial Trade Union Federation, said: "McDonald's has set up a preparatory committee, comprising representatives of both employees and management, to help set up the union, and it is hoped the branches will open in May.
"Also, Yum! Brands Inc (the operator of KFC)'s Guangdong branch has approached the local trade union federation for guidance on setting up trade unions."
Kong said that an inter-regional committee of trade unions might be established for both McDonald's and KFC.
Fast-food Firms Accused of Making a Fast Buck
Question: How much does a part-time worker at McDonald's earn in one hour?
Answer: Four yuan (52 cents), or slightly less than the price of two ice-cream cones.
Such is the claim of a report published last month, which alleged the burger chain, along with fellow US fast-food giants KFC and Pizza Hut, pays its part-time workers in Guangdong far less than the legal minimum wage of about $1 an hour.
The report said that McDonald's pays its part-timers, many of whom are college students, just 4 yuan per hour, a shade less than KFC, which pays 4.7 yuan (61 cents) and Pizza Hut, 5 yuan (65 cents).
Media in a further 10 cities, including Beijing, Shanghai, Tianjin, Taiyuan and Fuzhou, later reported similar findings.
The reports have caused uproar across the country.
KFC to Follow Rules over Its Alleged Exploitation of Staff
KFC will accept whatever ruling the Chinese government makes over its alleged illegal exploitation of part-time staff in China, said a president of Yum Brands Inc. at a press conference celebrating the company's 20 years in China on Monday.
"Although China's trade unions haven't concluded their investigations into the employment of part-time workers by KFC, we will do whatever is required," said Su Shijing, president of China operation for Yum Brands.
Apparently worried about a customer backlash that could affect sales and profits, Su said he hopes the public will remain cool during the government's investigation.
Criticism of several US fast-food chains was triggered by a Guangzhou-based newspaper report in late March saying they are underpaying and overworking their part-time staff.
China's All-China Federation of Trade Unions said on April 3 the US fast-food chains KFC, McDonald's and Pizza Hut have violated China's labor law. The federation along with the Ministry of Labor are investigating the companies to determine if they illegally paid their staff less than the minimum wage.
'Low Wage' Scandal: Not Just McDonald's
The scandal involving US fast-food giants McDonald's and KFC for alleged underpaying part-time employees should serve as a reminder of the need to strengthen enforcement of China's labor regulations.
The labor bureau in south China's Guangdong Province has reportedly begun its probe into the case, in which McDonald's and Yum Brands Inc, which operates KFC and Pizza Hut, are accused of paying part-timers less than the Guangzhou minimum wage of 7.5 yuan (US$0.97) per hour.
The cases make clear the necessity of increasing protection under our existing labor laws.
For a long time, labor controversies concerning underpaid workers have cropped up in both foreign and domestic enterprises. They include world-renowned firms as well as obscure local companies. The number of victims is believed to be large.
According to a survey by the Guangdong labor bureau and a local university last year, the issue of underpaid farmers-turned-city-workers has become a serious problem.
McDonald's Silent on Claim of Union Branches
A senior south China trade union official said fast food giant McDonald's has promised to set up union branches in Guangdong Province outlets before July, but the company on Thursday refused to confirm the claim and would not comment.
Kong Xianghong, vice chairman of the Guangdong Trade Unions Federation, said his federation was confident McDonald's would establish union branches in first half of this year.
However, he would not comment about union branches in KFC and Pizza Hut restaurants, both operated by Yum! Brands Inc., which were last week accused along with McDonald's of overworking and underpaying their part-time staff.
Kong said that a preparation group including representatives of employees and management had already been established, and both sides had agreed on issues such as union fee payments.
"Helping overseas-funded enterprises set up trade unions is beneficial to building harmonious labor relations," said Kong, adding his federation had a duty to encourage all overseas-funded enterprises set up trade unions.
Fast-food Giants Found Guilty
After completing its investigation, China's top trade union ruled yesterday that McDonald's, KFC and Pizza Hut were guilty of underpaying their staff in the city of Guangzhou, in violation of China's labor laws.
The fast-food giants should immediately settle the case by paying the workers in full and retroactively, said Li Shouzhen, a senior official with the All-China Federation of Trade Unions (ACFTU).
Speaking at a news briefing in Beijing, Li announced that "a joint investigation by the Guangdong provincial trade union and the labor authorities confirmed media reports about the companies' unlawful practices. The federation will uncompromisingly fight any practice that violates workers' rights."
Addressing solutions to the problem, Li stated that ACFTU had instructed its Guangdong branch to negotiate with the companies on behalf of the 3,000-odd part-time workers, most of them college students.
Fast-food Chains Exploit Part-time Staff: Trade Unions
An official with the All China Federation of Trade Unions said Tuesday the US fast-food chains KFC, McDonald's and Pizza Hut have violated China's Labor Law and they will take action to protect workers' interests.
We have asked the Guangdong Province Federation to probe into the employment of part-time workers by the US fast-food chains and claim wage compensation on behalf of the workers involved, said the official.
Other trade unions such as the Shanghai Trade Union, and the Hubei and Fujian federations have also made their voices heard.
Hubei Province Federation has asked subordinate organizations to investigate local foreign fast food chains suspected of similar unlawful behavior.
Fast-food Giants 'Did Violate Laws'
China's top trade union announced yesterday that McDonald's, KFC and Pizza Hut have violated the country's labor laws by underpaying part-time workers in the southern city of Guangzhou.
The fast-food giants must correct their wrongdoings and pay the workers retroactively, said Li Shouzhen, a senior official with the All-China Federation of Trade Unions (ACFTU).
"A joint investigation by the Guangdong provincial trade union and the labor authorities confirmed media reports about the companies' unlawful practice," Li told a news briefing in Beijing.
"The federation will uncompromisingly fight any practice that violates workers' rights," he added.
Fast-food Trio Blasted for 'Low Wage' Scandal
China's senior trade union federation has taken McDonald's, KFC and Pizza Hut to task for "underpaying" workers in Guangzhou.
After media reports pointed the finger at the fast-food giants, a senior All China Federation of Trade Unions (ACFTU) official said: "No company should enjoy special privileges in China. Irrespective of how big or strong a company is or who owns it, no company should be allowed to have in-house rules that violate the country's law."
Last week, Guangzhou-based New Express reported that the major fast-food chains all stood guilty of "violating labor laws" by underpaying part-time workers, the majority of who are college students. The report detailed an undercover probe carried out by the newspaper which discovered that workers in the three fast-food chains were paid only 60 percent of the nominal wage while still working overtime.
Fast-food Giants 'Violate Pay Rules' for Part-timers
At McDonald's, they're not loving it; at KFC, they are working their fingers to the bone; and at Pizza Hut, they're not getting enough dough, forget the toppings.
So says a popular local newspaper, which claimed yesterday that the US fast-food giants are violating China's labor laws by under-paying part-time workers by up to 40 percent in their local chains.
The southern metropolis set the minimum wage at 7.5 yuan (US$97 cents) per hour for part-time workers at the beginning of this year, higher than most parts of the country, according to the New Express.
But McDonald's pays only 4 yuan (US$52 cents), KFC 4.7 yuan (US$61 cents) and Pizza Hut 5 yuan (US$65 cents) per hour for those who work as part-timers, it said, citing its own investigation.
The municipal labor authorities will investigate the matter, Zhang Fengqi, deputy director of the provincial labor and social security department, said yesterday.