| Economic Forum |
McDonald's Corp. said it will raise wages for its restaurant crews 12% to 56% above the minimum-wage guidelines as of Sept. 1. It's a move that McDonald's hopes will bolster its image as an employer. Wages at McDonald's and its fast-food rival Yum Brands Inc., which runs the KFC and Pizza Hut chains, have been under increased scrutiny after the powerful All-China Federation of Trade Unions in April accused the fast-food giants of violating labor laws by underpaying part-time workers in Guangzhou. The announced increase will affect about 45,000 full-time and part-time workers, including students. Full-time workers in the large southern city of Guangzhou, for example, will see their monthly wages rise 21% to 1,072 yuan ($142) a month. Overall, the change will average out to a 30% pay rise for all McDonald's frontline staff, said Jeffrey Schwartz, McDonald's chief executive for China. Mr. Schwartz said the Guangzhou incident "expedited" the company's pay-rise program, which he said had already been in the planning process for a year. Local authorities later absolved the companies of wrongdoing, but McDonald's, KFC and Pizza Hut received negative publicity that focused on the issue of part-time workers, who weren't covered under the city's legal minimum wage of 7.50 yuan, or about 99 cents, an hour. While the negative publicity didn't appear to affect sales, Mr. Schwartz said, "for me as an employer, I didn't want to be portrayed that way, because we're not that way." Wage pressures have risen lately amid a sharp increase in the price of basic necessities. The consumer price index rose 4.4% in June, a 28-month high, largely because of price increases for foodstuffs. McDonald's currently has 815 outlets in China and is adding about 100 stores a year. Executives declined to say how much the wage increases would add to operating costs, which are also affected by rising prices of grain and meat in the country. McDonald's is also swapping out its current yellow-checked shirt uniforms. Soon counter staff will be wearing blue, white and brown-striped polo shirts with the Golden Arches insignia discreetly embroidered on the sleeves, a design they picked out themselves. McDonald's also said it was extending its system of bonuses and incentives to the third of its management staff who were previously ineligible. The system, which pegs restaurant managers' pay to individual outlet sales as well as overall company performance, has already resulted in about 4% of restaurant managers doubling their salaries in the first half of this year, the company said.
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