HK union joins critics of McDonald's HK and China sale, sees pay squeeze

[HONG KONG] The Hong Kong Confederation of Trade Unions (HKCTU) warned that McDonald's Corp's up-to-US$2.1 billion sale of its Hong Kong and China operations could hit workers' pay, adding to growing criticism of the deal on the mainland and elsewhere.

The fast-food giant said last month it had agreed to sell the bulk of its China and Hong Kong business to state-backed conglomerate CITIC Ltd and US private equity firm Carlyle Group LP in a deal that will see the consortium act as the master franchisee for a 20-year period.

The HKCTU's statement on Monday comes just days after a Chinese consultancy, Hejun Vanguard Group, filed a formal complaint with China's Ministry of Commerce also claiming the decision to move to a master-franchisee model may hurt its 120,000 workers in China, as well as consumers.

The union group said the deal would put further pressure on pay at the US company's Hong Kong outlets, where many workers earn just above the current minimum wage of HK$32.5 (S$5.95) per hour. The group represents 90 affiliate organisations and 170,000 members.

"In other countries where McDonald's has sold a large stake of its business, the resulting model has placed enormous pressure on franchisees, which has made it harder for franchise operators to provide adequate pay and conditions for their workers," HKCTU official Wong Yu Loy said in the statement.

"If the buyers in Hong Kong get squeezed by McDonald's as they have in other countries, workers here may get even less as a result," Mr Wong said.

McDonald's did not immediately respond to a request for comment, but has said its franchise model globally is based on mutually beneficial partnerships.

The sale has also been criticised by The Service Employees International Union, a US labour organisation, which warned in a statement last month that previous such transactions in markets - including Brazil and Puerto Rico - had hurt workers.

REUTERS