Peter Thal Larsen looks at a timely boost for some of the lowest-paid workers in the country as the Government's Low Pay Commission collects evidence on the planned minimum wage.
From mid-January, McDonald's lowest-paid employees - if they are aged 18 or over - will earn pounds 3.50 an hour, an 8 per cent increase from the pounds 3.25 they get paid at the moment. In areas where the cost of living is high, like London, the hourly rate rises to pounds 4.
Meanwhile Burger King, McDonald's closest rival in the fast food battle, said it planned to review pay levels on 8 January. The chain, a subsidiary of drinks group Diageo - the company recently formed by the merger of Guinness and GrandMet - currently pays a basic hourly wage of at least pounds 3.28 outside London, and pounds 3.39 in the capital.
The rises will prompt speculation that sectors such as the fast food industry, which have traditionally relied heavily on low-paid workers, are preparing for the imminent introduction of a national minimum wage by the Government.
The Low Pay Commission, chaired by Professor George Bain of the London Business School, is looking into the issue and is expected to report its findings in the spring. That would pave the way for the implementation of a minimum wage in 1999.
The Confederation of British Industry argues that a minimum wage set above pounds 3 would lead to job losses if the differential with wages higher up the pay scale was restored. The Trades Union Congress, however, has asked for the wage to be set above pounds 4.
McDonald's denied that the pay increases were related to the minimum wage. "We review all wage rates every year," said a spokesman, adding that the group had to offer competitive wages to attract and retain competent staff. McDonald's expects the average pay increase across its workforce to be closer to 5 per cent.
Similarly, a spokeswoman for Burger King said the wage review was prompted by the need to attract more staff into the industry rather than by any policy move by the government.
Both chains need the extra people. McDonald's yesterday announced an ambitious expansion plan in which it will spend pounds 85m setting up 100 outlets in the UK in the coming year, creating about 5,000 jobs. Approximately a third of the jobs will be in the South-east, with the same number in the North, 20 per cent in the Midlands and the rest spread across Scotland, Wales and Northern Ireland.
However, as each restaurant requires a full-time management team of just five, most of the jobs will be part-time. Only 35 per cent of McDonald's workforce currently work 20 hours or more a week.
Burger King plans to open 55 new restaurants in 1998, creating between 1,500 and 2,000 new jobs.