updated 4/10/2007 8:31:33 AM ET 2007-04-10T12:31:33

McDonald’s and KFC are allowing union branches in their China outlets, in a nod to the country’s state-sanctioned labor federation, while labor officials in Shanghai said Tuesday that a probe cleared the companies of any labor violations in that city.

McDonald’s China began planning to set up unions in southern China’s Guangdong province early this year, and will “move on step by step,” the company said.

Yum Brands Inc., operator of KFC and Pizza Hut, also said it allows most of its subsidiaries to join the All-China Federation of Trade Unions, or ACFTU — the government-affiliated umbrella organization for all labor groups in China.

“The remaining ones will handle the issue according to Chinese regulations,” Yum said in a statement.

It was unclear if any union branches had actually been established yet at either company.

“In China, the decision whether to join a union or not is a personal one, made by each individual employee,” the McDonald’s Corp. statement said.

The fast-food giants came under pressure last month following a report alleging that their part-time workers in Guangdong were being paid up to 40 percent less than the local legal minimum wage of about $1 an hour.

Labor authorities in Guangdong and elsewhere began investigating, while the ACFTU urged the companies to redress any violations of labor regulations.

Both McDonald’s and Yum said they were seeking clarification about recently amended laws regarding wages and other issues but defended their personnel policies, saying they were in compliance with the law.

“McDonald’s always maintains excellent employee relations and believes that people are the most important asset a business can have,” the company said in a statement.

“We are proud to offer our employees a good working environment, competitive salary and benefits and open communication channels,” it said.

Labor officials in Shanghai said they found no violations of the minimum wage regulations in McDonald’s and KFC outlets in that city because the regulations there do not apply to hourly wages paid to part-time or student workers.

Inspections at 37 KFC and McDonald’s outlets involving 2,450 employees — more than half of them students or part-timers — showed that McDonald’s employees were paid a minimum hourly wage the equivalent of 73 cents, while KFC’s workers earned at least 82 cents, the state-run newspaper Shanghai Daily reported.

That’s below Shanghai’s minimum wage of 84 cents an hour or $97 a month, but those rules apply only to full-time workers.

Labor officials confirmed the reports but would not comment further. The average monthly income for city residents is $320.

Results of investigations in other cities and regions have not been announced.

Despite the ruling Communist Party’s origins in labor and peasant uprisings, China does not allow independent unions and jails and harasses unauthorized labor activism.

But the ACFTU has been seeking to boost the group’s presence in foreign companies, which employ some 25 million people in China but until recently resisted allowing labor organizing. Last year it scored a major coup with a decision by Wal-Mart Stores Inc. to allow union branches in its China operations.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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