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McDonald's offers Olympian pay rises
After accusations of making illegally low payments to its predominately part-time staff, and pressure to unionize its outlets in China, McDonald's has announced an average 30 per cent pay rise to its more than 40,000 mainland employees.
The pay rises, which come into effect in September 2007, range from 12 per cent to 56 per cent, and vary according to local and regional conditions, the official Xinhua news agency reported 7 July, 2007. Employees' wages in the capital Beijing, for example will increase to 15 per cent above the municipal minimum wage of 7.90 yuan (just over one US dollar) per hour, while wages in Shanghai and Guangzhou will increase by 19 per cent and 17 per cent respectively.
The wage rises are partly a response to increasing inflation, but the timing of the announcement, one year before the opening of the Beijing Olympics, suggests that McDonald's, a major Olympic sponsor, feels the need to bolster its flagging corporate image in China during the run-up to the Games.
Last year, a major riot broke out at a factory in Dongguan producing McDonald's toys in protest at poor wages and living conditions. Earlier this year, an undercover report by the Guangzhou-based New Express revealed that student employees were being paid less than the legally mandated minimum wage. The report was followed up by the All China Federation of Trade Unions (ACFTU), which subsequently pressurized McDonald's and fast-food rivals KFC and Pizza Hut into allowing the establishment of unions in their outlets.
In April, McDonald's agreed to allow ACFTU branches in some of its restaurants, and the unionization process spread rapidly to the point where it is understood the majority of outlets now have a union. However, it is extremely unlikely the ACTFU played a significant role in negotiating the major, across the board, pay rises announced by the corporation. It was almost certainly a unilateral decision made by McDonald's in an attempt both to improve its corporate image and secure a more stable workforce.
McDonald's, like nearly all major international fast-food brands in China, has been placed under significant pressure this year from both the government and the domestic media to comply with Chinese labour laws and demonstrate its good corporate citizenship. Starbucks, for example, was finally evicted, to great public acclaim, from its outlet in the Forbidden City less than a month before McDonald's announced its pay rises. Moreover, domestic brands are making a determined effort to boost their position by riding the wave of patriotic pride expected to be generated by the Olympics, and the major international brands know they will have to counter that threat by showing their presence in China benefits everyone, not just their international shareholders.