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

[February 20, 2017]  HONG KONG (Reuters) - The Hong Kong Confederation of Trade Unions (HKCTU) warned that McDonald's Corp's up-to-$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 U.S. 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 U.S. company's Hong Kong outlets, where many workers earn just above the current minimum wage of HK$32.5 ($4.20) per hour. The group represents 90 affiliate organizations 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," Wong said.

A man sleeps at a 24-hour McDonald's restaurant in Hong Kong, China November 10, 2015. REUTERS/Tyrone Siu

McDonald's said its franchise model globally is based on mutually beneficial partnerships and the company "treasures" employees as its most important asset.

"McDonald’s strictly abides by Hong Kong labor legislation and the statutory requirements," said a spokeswoman for the fast-food company.

"The level of remuneration of our employees is based on their positions, working experience, expertise, performance, as well as market conditions. The current compensation and benefits of McDonald's Hong Kong will not be affected as a result of bringing in strategic partners."

The sale has also been criticized by The Service Employees International Union, a U.S. labor organization, which warned in a statement last month that previous such transactions in markets - including Brazil and Puerto Rico - had hurt workers.

(Reporting by Michelle Price; Editing by Kenneth Maxwell and Louise Heavens)

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