China's McDonald's, KFC, Pizza Hut accused of low pay

BEIJING (Reuters) - Fast-food giants McDonald's , KFC and Pizza Hut are under fire in China, accused by local media of underpaying part-time workers and breaking labor rules in a booming southern city.

Guangzhou, capital of Guangdong province, has set a minimum wage of 7.5 yuan ($0.97) an hour since the start of this year. But the city's New Express newspaper has said that the fast-food restaurants had paid part-time employees from 4 to 5 yuan an hour, citing contracts signed by workers.

Company representatives denied breaking labor laws.

A provincial official said the claims would be investigated, the China Daily reported on Thursday.

"If the case is serious, they will be dealt with according to the law," the deputy chief of the Guangdong labor and social security office, Zhang Fengqi, said of the companies. They would have to compensate employees if they were found to have broken laws, he said.

Both McDonald's (MCD.N) and Yum Brands Inc. (YUM.N), owner of the KFC and Pizza Hut chains, denied wrongdoing.

"We are working with the government and are communicating with them to clarify the laws regarding part-time students," Yum Brands spokeswoman Wang Qun said.

"We have been strictly following regulations regarding employment in China."

McDonald's said it was "a responsible employer," followed regulations and offered equal opportunities to staff.

Millions of Chinese workers toil in dangerous, low-paid jobs with little protection. But as the country's economy has grown, the government has been seeking to raise their incomes in a bid to boost consumer spending and head off popular discontent.

With its rising affluence, China is also a lucrative market for fast-food multinationals. McDonald's, KFC and Pizza Hut between them have about 3,000 outlets nationwide and employ around 200,000 people, only a fraction of them full time, the New Express said.

Many of the part-time workers in the eye of this controversy are college and university students trying to help pay for their education.

Guangzhou labor officials would "fully inspect" the three restaurant chains throughout the city, the New Express reported.

McDonald's has some 50,000 employees in mainland China and aims to add 100 restaurants a year to its current stable of over 790 restaurants in the country.

Yum Brands, whose 2,000 KFC, Pizza Hut and Chinese-style East Dawning restaurants in China generate nearly a third of its global operating profit, has more than 100,000 staff in the country.

(Additional reporting by Jerker Hellstrom in Shanghai)