A string of labor law violations since the end of March have damaged the reputation of international companies operating in China and focused the government and unions on strengthening workers' rights.

The nationwide spotlight that has been put on labor laws in recent months first began to shine when American fast-food giants McDonald's and Kentucky Fried Chicken (KFC) were accused of underpaying part-time staff, mainly university students. Since then labor rights violations have been uncovered across China.

Among the latest cases, the Federation of Trade Unions of Shanxi Province announced on April 18 that some foreign catering companies in Shanxi were paying their Chinese employees salaries below the lowest standard set by the government.

Whistleblower

It all began when Wang Huaping, a journalist at Guangzhou city newspaper New Express, began to receive calls from part-time workers at fast-food restaurants McDonald's, KFC and Pizza Hut. The callers claimed that their hourly salaries were well below the minimum standard as set out in new provincial government regulations on minimum wages, issued at the beginning of this year.

The fame of the brands and the number of employees concerned prompted Wang to investigate. McDonald's has a total of 670 restaurants, which altogether employ around 50,000 Chinese employees. KFC operates more than 1,500 restaurants in China and Pizza Hut has over 200 restaurants, which altogether employ around 100,000 people. To get firsthand material on the salary and benefits of the accused companies, New Express sent journalists and interns to become part-time workers at the fast-food restaurants. It took around one month for the undercover investigators to return with their new work contracts.

On March 28 New Express published an in-depth report, which accused KFC and McDonald's of illegal employment practices. Those accusations included paying below the minimum legal wage, inserting unfair clauses into work contracts, and making part-time employees work too many hours.

The investigative report said that the average pay for part-time workers in a dozen McDonald's outlets in Guangdong Province was 4 yuan ($1=7.7206 yuan as of April 25) per hour plus a subsidy of 1.3 yuan per hour. For KFC outlets, the average pay was 4.7 yuan per hour with a 0.8 yuan per hour subsidy for working four hours or longer successively. For Pizza Hut, the average pay was 5.8 yuan per hour. All these average hourly rates were below Guangdong Province's set minimum hourly wage for part-time workers released at the beginning of the year, which is 7.5 yuan.

During the investigation, reporters found that part-time workers accounted for about 80 percent of the total staff of the foreign fast-food restaurants. The majority of the part-time employees were university students from poor families. In order to earn money to support themselves, the students sometimes had to work long hours, on occasion 13 hours in one day. That led to another illegal practice by the fast-food giants. According to labor regulations in China, the average daily working hours for part-time employees cannot surpass five hours, and their weekly working time cannot surpass 30 hours. If their working hours go beyond these two requirements, the employer is bound by law to make them full-time employees and take on the responsibilities that go with that.

"Many part-time workers in McDonald's and KFC who are working as many hours as full-time employees can only get paid as part-time workers without any benefits or social security subsidy," complained a female university student working at one McDonald's restaurant, to a New Express journalist.

"I have worked in this KFC outlet for over a year, but still haven't got a work contract with the restaurant," grade-four university student Wu Juan said. "But I dare not to ask for the work contract that I am entitled to since I cannot afford to lose this job."

Deep influence

The report caused widespread concern, and, facing questioning from the media, McDonald's released a statement on March 28, the same day of the report's publication. In this statement, the fast-food giant claimed that it had complied with Chinese laws and regulations and the payment to its employees met all state requirements. On the same day, the China division of Yum! Brands Inc., the owner of KFC and Pizza Hut, announced through the media that the two brands had always behaved in accordance with Chinese laws and all payment standards had met state requirements.