Mcdonald's Corp.is raising wages and adoptingnew uniforms, stepping up efforts to burnish itsimage as an employer in China amid tighteninglabor laws and scrutiny by China's government-backed trade union.
Mcdonald's said it will raise wagefor its restaurant crews 12% to 56% above China'sminimum-wage guidelines as of Sept. 1, amove thatwill affect about 45,000 full-time and part-timeworkers in the large southern city of Guangzhou,for example, will see their monthly wages rise 21%to 1,072 yuan ($142) a mouth Overall,the change will average out to a 305pay rise for all McDonald's frontline staff, saidJeffrey Schwartz,Mcdonald's chief executive for China Wages at McDonald's and its fast-food rival Yum BrandsInc.,which runs the KFC and Pizza Hut chains,havebeen under increased scrutiny in China Federation ofTrade UnionS in April accused the fast-food gaints ofviolating labor laws by underpaying part-time workersin Guangzhou. Local authorities later absolved the companies of wrongdoin, but McDonald's, KFC and Pizza Hut receivednegative publicity in local media reports that focusedespecially on the issue of part-time workes,who weren'tcovered under the city's legal minimum wage of 7.50 yuan,or about 99 cents, an hour. Mr.Schwartz said the Guangzhou incident "expedited" thecompany's pay-rise program,which he said had already beenin the planning process for a year. While the negative publicity did't appear to affect sales,he said, "for me as an employer, I didn't want to be portrayedthat way, because we're not that way." Yum Brand didn't respond to requests for comment. While the American fast-food giants have been underparticular scrutiny because of their size and high-profilebrands, wage pressures in China in general have risen latelyamid a sharp increase in the price of basic necessities. Fox example,China saw a 4.4% rise in its consumer price indexin June, a 28-month high,largely because of price increases forfoodstuffs. For McDonald and Yum Brand,China is an increasingly importantmarket.Mcdonald's,in particular, is on a media blitz here aheadof the 2008 Beijing Olympic Games, for which it is an official sponsor. McDonald's currently has 815 outlets in China and is addingbout 100 stores a year.Executives declined to say how much the wageincreases would add to operating costs in China,which are also affectedby sising prices of grain and meat in the country Mr.Schwartz said McDonald's has been able to lower other costs,such as for paper, through increased economies of scale resultingfrom expansion. McDonald's also swapping out its current yellow-checked shirt uniforms.In 30 to 60 days,counter staff will be wearing blue,white and brown stripedpolo shirts with the Golden Arches insingnia discreetly embroidered on thesleeves,a design they picked out themselves. McDonald's also said it was extending its system of bonuses and incentives tothe third of its management staff who were previously ineligible.The system,which pege restaurnt manager's pay to individual outlet sales as well as overallcompany performance, has already resulted in about 4% of restaurant managers doubling their salaries in the first half of this year, the company said. Since April,the Chinese trade union has extended its reach in McDonal'sCurrently 80% of the company is unionized, with plans to in cresase that figureto 100% by the end of this year.About half of the company's employees ago.Meanwhile,Revisions to China's labor laws require that,as of Jan.1 next year,part-time workers will be given increased rights and protections.
