McDonalds raises pay in China

With wage increases and new uniforms, McDonald's Corp is raising efforts to sell itself as an attractive employer to the Chinese government, the Wall Street Journal reported.

The huge fast food chain said Monday it will increase the pay of its restaurant crew by 12% to 56% higher than the suggested minimum wage. This will come into effect Sept.1 and will vary across cities and provinces in China, benefiting about 45,000 workers, including students.

Overall, said CEO of McDonald's in China, Jeffery Schwartz, there will be a 30% pay rise for all McDonald's China crews.

The topic of wages has been a touchy one, with McDonald's and its rival Yum Brands Inc. under scrutiny by the All-China Federation of Trade Unions, which accused the companies of underpaying part-time workers in April, WSJ reported. While the company was later absolved of all charges, both fast-food giants received much negative press on the issue of part-time workers, who were not covered under the city's legal minimum wage of RMB 7.50 per hour, the report said.

The negative press, although did not seem to affect sales, did quicken the company's execution of the intended pay rise, WSJ reported Schwartz as saying.

In addition, the company will also extend its system of bonuses and incentives to a third of employees that were previously not eligible. Under the system, restaurant managers' pay is pegged to individual outlet sales as well as overall company performance. This enables a further increase in the manager's salary.

The cost of this pay rise to the company was not disclosed. Meanwhile, Schwartz said the costs had been partially offset as McDonald's has been able to lower costs through economies of scale from its expansion, the report said.
In the next month or two, the fast-food giant will also change its uniform. The new uniform is a blue, white and brown striped polo shirt with the McDonald's logo on the sleeve. The design was chosen by the employees themselves.

At present, McDonald's has 815 outlets in China, with plans to add 100 new stores per year. With the 2008 Beijing Olympics looming around the corner, China is becoming increasingly important for McDonald's, especially since the company is the official sponsor of the Games.

Beginning April, the All-China Federation of Trade Unions started working in McDonalds. 80% of the company is unionized right now, with plans to increase to 100% by year-end, WSJ reported. This is in contrast to the 50% union members in 2005.

China's new labor laws have also required that by the start of 2008, part-time workers will be entitled to greater rights and protections.