China: “McScandal” shows the need for real trade unions

’Part-time’ workers on 13 hour shifts. State-run trade unions win ’victory’, but for whom?



"McScandal" shows the need for real trade unions

The fast-food giants – McDonald’s, Kentucky Fried Chicken (KFC) and Pizza Hut – have been caught underpaying their young workforce in China. They pay as much as 40 percent below the already abysmally low legal minimum wage.

A series of exposés in China’s state-run media has shone the spotlight on rampant labour abuses at the US-owned multinationals. McDonald’s has 670 restaurants employing a total of 50,000 in China. KFC runs more than 1,500 restaurants in China and Pizza Hut – part of the same concern as KFC, Yum! Brands Inc. – has over 200, totalling around 100,000 employees between them.

Investigations into alleged legal violations by the companies were initiated by the southern newspaper, New Express. The newspaper discovered that part-time workers accounted for about 80 percent of the total staff of the foreign fast-food restaurants, although their definition of ’part-time’ turned out to be a cover for underpaying the workforce and denying them their legal rights to such things as written contracts of employment, medical insurance and more. As Beijing Review reports, "In order to earn money to support themselves, the students sometimes had to work long hours, on occasion 13 hours in one day."

As this newspaper points out, "According to labour 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 [or] the employer is bound by law to make them full-time employees and take on the responsibilities that go with that." (Beijing Review, 3 May, 2007).

The average pay for part-time staff in a dozen investigated McDonald’s restaurants in Guangdong Province was four Yuan per hour (around 50 US cents) plus a subsidy of 1.3 Yuan per hour. The province’s minimum wage (minimum wage levels are set by provincial governments in China) for part-time workers is 7.5 Yuan (around 98 US cents) an hour.

"Even the so-called minimum wage is a joke," university student, Qu Yun, told Chinaworker. "Most people have never heard what the minimum is. It’s never enforced, so no one really knows."

Minimum wage rulings are ignored at more than 60 percent of China’s workplaces, he says, showing that US companies are not the only villains. Many Chinese employers act in exactly the same way.

Mostly poor students

University students from poor families form a large part of the fast-food chains’ workforce. These youth and their parents rely on the low pay from ‘McJobs’ to help ease the cost of a college education, which has rocketed after years of ‘market reforms’ in the education sector. The average yearly cost – tuition fees plus other charges – of a place at a public university is 10,000 Yuan (1,300 US dollars). This is almost the equivalent of a year’s disposable income in the most developed parts of China, as China Daily (17 May, 2007) points out. At this rate, a McDonald’s worker must work 38 hours a week, all 52 weeks of the year, in order just to pay their university fees. Of course that would be impossible, and many students from poor families finance their education by taking out loans, saddling them with hefty debts at the start of their working life.

"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 and McDonald’s employee to New Express (28 March, 2007).

"I have worked in this KFC outlet for over a year, but still haven’t got a work contract with the restaurant," says grade-four university student Wu Juan, quoted in Beijing Review (3 May, 2007). "But I dare not ask for the work contract that I am entitled to since I cannot afford to lose this job."

Government intervenes?

The March report in New Express attracted government attention at the provincial level in Guangdong. The province’s Labour and Social Security Department launched an investigation. On April 10, the department published its investigation results, which confirmed that the fast-food restaurants had violated China’s labour code in several areas, but failed to find them guilty of violating the minimum wage.

This incident speaks volumes about what is happening in China today, where the organs of the ’communist’ government in nine cases out of ten, if not more, support the capitalists against the workers. Only when subjected to huge pressure and the threat of destabilising protests, do the authorities intervene to compel management to offer concessions, or obey the law.

Defending his company’s actions, Cui Huanming, the marketing director of the Guangdong branch of Yum! Brands Inc., claimed: "The university students we have hired are neither full-time employees nor part-time employees. They are a special group of employees." (Beijing Review, 3 May 2007).

The use of such legalistic sleight of hand, by unscrupulous bosses is unfortunately a very common practice in China.

The provincial government refused to take action against the company, but instead called in its trade union arm, the All China Federation of Trade Unions (ACFTU). In early April, the Guangdong Federation of Trade Unions (ACFTU’s branch in the province) announced the establishment of a "preparatory panel on setting up a trade union in McDonald’s Guangdong branch, consisting of labour and management representatives". The state media made a big thing about this ’breakthrough’ for ACFTU in the fast-food sector, but the above statement shows that what is happening has nothing to do with trade unionism, and will lead to few if any benefits for the workers.

Not a real union

The ACFTU is not a genuine, independent, democratically controlled trade union, but rather an arm of the authoritarian state. It has a proven record of opposing strikes and supporting repression against workers that organise to defend their rights. ACFTU officials, like every other section of the state apparatus, are ever on the lookout for ’business opportunities’. Union officials in the state-owned companies, for example, get preferential treatment when shares are distributed as a step towards company privatisation.

For some years, however, the ACFTU has been trying to beef up its influence in the fast-growing private and foreign-controlled sector as its membership has shrunk dramatically in tandem with the contraction of the once central state-owned sector. This process was especially rapid in the late 1990s. At its congress in 2000, the then ACFTU chairperson, Wei Jianxing, reported that branches "have collapsed and their members [have been] washed away".

For the ACFTU and the ruling ’communist’ party, this poses a vital issue of control over a large, unorganised and increasingly dissatisfied workforce. In a report released last week, the ACFTU claimed it has now set up union branches at 60 percent of China’s foreign-owned companies. "Sound labour-management relations in foreign companies will attract more foreign investment," a union spokesperson said, in presenting the report. (China Daily, 16 May 2007)

The ACFTU’s ‘corporatist’ doctrine – ensuring that management are integrated into union structures at the very top – has generally won over even sceptical foreign capitalist conglomerates. Wal-Mart agreed to ACFTU representation at its China outlets in 2005 in what was seen as a ’landmark’ decision for the union’s turn towards the non-state sector. But at many Chinese enterprises, the chair of the ACFTU branch is appointed by management; usually this role is held by the personnel manager.

The ACFTU sees its role as preventing conflicts and, above all, any steps by workers to organise themselves independently of the state. Nowadays, the ACFTU like every other section of the state apparatus, echoes president Hu Jintao’s confucian mantra about "building a harmonious society". This is meant to signify a rejection of struggle – something associated with the Mao era in China’s history and definitely not desirable in today’s environment.

What about Chinese capitalists?

China’s ‘McScandal’ case shows that foreign capitalists, rather than a force for improving workers’ rights and conditions, are among the worst abusers. These companies hypocritically sign ‘codes of ethics’ in an attempt to disarm consumer activism and growing criticism in their main markets. But then they continue a policy of brutal exploitation in China and other low-wage economies.

However, this episode also exposes the hypocrisy of China’s state-run media, tilting at convenient ‘foreign’ targets, as if the practices of McDonald’s and KFC were exceptional. This is of course not the case.

The conditions ‘exposed’ at US-owned fast-food outlets are standard in China. But even relatively privileged white-collar workers face an increasing workload and declining real living standards. The Beijing Morning Post revealed that 70 percent of China’s white-collar workers put in an average of more than 10 hours a day and are denied holidays. China Daily (9 May, 2007) noted that in the last three years "the number of professionals complaining of overwork and lack of sleep has soared".

These conditions are preparing a torrent of demands for genuine trade unions in China, which are of course illegal today. Manoeuvres by officialdom, like the present efforts by ACFTU to ’organise’ in private and foreign-owned companies, will not succeed in cutting across this process. On the contrary, the pro-management line of the ACFTU is further exposing this organisation among layers of workers and youth that had no direct experience of its role in the past. Many young workers are scathing in their criticisms. The only change when ACFTU sets up a branch, they say, is that more money is docked from their salary – for union membership!

China Worker calls for:

  • A national minimum wage of at least 1,500 Yuan!
  • Nationalisation without compensation of all companies – foreign or domestic – that violate the labour code, on working hours and levels of overtime, wages, child labour, and holiday entitlement!
  • Genuine fighting and democratic trade unions, and elected workplace committees!
  • Solidarity from the international labour movement – ‘An injury to one is an injury to all!’

Chinese workers should not be left to struggle for democratic and trade union rights alone; they need material and political support from trade unionists in other countries, in the best traditions of the international trade union movement.

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May 2007