Working for McDonald's in Europe: The Unequal Struggle

248 Pages·2000·4.956 MB·English

by  Tony Royle

Working for McDonald’s in Europe
The McDonald’s Corporation is the most famous brand and the largest food-
service system in the world. It is a phenomenon in its own right, uniquely
representing the opportunities and dangers associated with the process of
globalisation.
This volume provides a detailed analysis of the extent to which the
McDonald’s Corporation adapts or imposes its labour relations policies in
Europe. It is based on more than 6 years of empirical research and examines the
interaction between this global corporation and both national- and European-
level systems of industrial relations. The author exposes the conflict that arises
in these differing regulatory systems, particularly that between the trade unions
and the corporation. He argues that this conflict is an inevitable outcome of the
struggle to protect workers’ rights in an increasingly internationalised global
economy. In the current climate it is a struggle which is unequally blanaced in
favour of the ideology of economic liberalism and the interests of the
multinational. In this analysis, even in the countries of mainland Europe, which
are often seen as the last bastion of collectivism, the multinational corporation
is increasingly seen as a threat to workers’ statutory and democratic rights.
Key features include:
(cid:127) an overview of the McDonald’s Corporation’s history, development and
structure;
(cid:127) an analysis of the corporation’s franchising system, work organisation and
corporate culture;
(cid:127) an analysis of the problems of unionisation and establishing collective
agreements;
(cid:127) an examination of the realities of workplace representation and
co-determination, including national systems of statutory works councils and
union representation rights;
(cid:127) a chapter dealing specifically with European legislation, in particular the
McDonald’s European Works Council.
Tony Royle is Senior Lecturer in the Department of Human Resource
Management, Nottingham Trent University. He has published widely in the
© 2000 Tony Royle
area of labour relations in multinational corporations and his principal interest
is in comparative and European industrial relations.
© 2000 Tony Royle
Routledge Studies in Employment Relations
Series editors: Rick Delbridge and Edmund Heery
Cardiff Business School
Aspects of the employment relationship are central to numerous courses at both
undergraduate and postgraduate level. Drawing from insights from industrial
relations, human resource management and industrial sociology, this series
provides an alternative source of research-based materials and texts, reviewing
key developments in employment research.
Books published in this series are works of high academic merit, drawn from a
wide range of academic studies in the social sciences.
Rethinking Industrial Relations
Mobilization, collectivism and long waves
John Kelly
Social Partnership at Work
Workplace relations in post-unification Germany
Carola M.Frege
Employee Relations in the Public Services
Themes and issues
Edited by Susan Corby and Geoff White
The Insecure Workforce
Edited by Edmund Heery and John Salmon
Public Service Employment Relations in Europe
Transformation, modernization or inertia?
Edited by Stephen Bach, Lorenzo Bordogna, Giuseppe Della Rocca and David
Winchester
Human Resource Management in the Hotel Industry
Strategy, innovation and performance
Kim Hoque
Reward Management
A critical text
Edited by Geoff White and Janet Druker
Working for McDonald’s in Europe
The unequal struggle
Tony Royle
© 2000 Tony Royle
Working for McDonald’s in
Europe
The unequal struggle
Tony Royle
London and New York
© 2000 Tony Royle
First published 2000
by Routledge
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
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© 2000 Tony Royle
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
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ISBN 0-203-00646-1 Master e-book ISBN
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© 2000 Tony Royle
Contents
List of figures and tables
1 Liberalism, collectivism and the multinational corporation
2 Welcome to Big Mac
3 The corporate paradox: McDonald’s and its franchise system
4 McDonald’s at work
5 ‘There’s no place like home’: the impact of trade unions and
collective bargaining frameworks
6 Co-determination? What the hell is that?!
7 For a few dollars more: comparing pay and conditions
8 Where’s the beef? The European Works Council
9 Conclusion
Appendix: doing the research
Notes
References

© 2000 Tony Royle
Figures and tables
Figures
3.1 An example of an observation check list (OCL) used for the toasting
and preparation of buns
4.1 Job titles and hierarchy in the restaurants.
7.1 McDonald’s net wage (1999) as a percentage of the average net wage
(1998)
7.2 A comparison of the working time required to purchase a Big Mac on
the McDonald’s net wage and on the average net wage
Tables
2.1 Year of entry, restaurants and proportions of franchises and employees
in autumn 1999
3.1 Differences and similarities in franchise operator and company-owned
restaurant manager autonomy
4.1 Labour turnover percentages in Germany and the UK
4.2 Growth percentages in part-time work in Europe
5.1 Union density in McDonald’s European operations
7.1 Comparison of hourly pay rates in Germany and the UK (£)
7.2 McDonald’s gross wages (1999) compared with the average gross wage
(1998)
7.3 McDonald’s net wage compared with the average net wage
7.4 Relative purchasing power of the McDonald’s disposable wage
7.5 Additional rates for unsociable hours
7.6 Workers’ and top executives’ pay 1994–5
7.7 Periods of notice for redundancy in 1999 (days)
7.8 Paid holiday (days) for full-time (35+hours) hourly paid employees
(1994 and 1999)

© 2000 Tony Royle
1
Liberalism, collectivism and the
multinational corporation
The men who run global corporations are the first in history with
the organization, technology, money and ideology to make a
credible try at managing the world as an integrated economic unit.
(Barnet and Mueller, 1974, quoted in Clarke, 1996:26)
The self-destructive tendency of modern capitalism begins with the
large corporation.
(Galbraith, 1992:53)
This book is concerned with the protection of democratic rights in the
workplace and raises a number of important questions about the regulation of
multinational corporations in modern society. Multinationals have come in for a
great deal of criticism; some of their detractors suggest that they are the means
by which exploitative practices are dispersed world-wide (Van der Pijl, 1989;
Sklair, 1995). Indeed, Pilger (1998) in his critique of the global capitalist system
has described them as the ‘shock troops of the imperial powers’. Other
commentators have been more sanguine and have suggested that multinationals
are subject to the constraints of the global competitive economy (Gray, 1992)
and that they are mostly interested in promoting the common good, being a
benign source of investment, technology transfer and a means of upgrading
labour forces (Dunning, 1993).
The round of negotiations at the World Trade Organisation (WTO) in
Seattle at the end of 1999 and the role of the multinational were the focus of a
good deal of organised protest from groups concerned about Third World
development, environmental and health issues and labour standards. No fewer
than 1,200 non-governmental organisations (NGOs) had formed a coalition
criticising the activities of multinationals and calling for a halt to the WTO’s
drive to cut trade tariffs and open up markets. They suggest that the WTO itself
is too strongly influenced by the big corporations and that its powerful disputes
system, which allows for punishing sanctions if trade rules are broken,
undermines international agreements on the environment and affects the
sovereignty of countries on issues as diverse as food safety and labour standards
© 2000 Tony Royle
(Goldsmith, 1996; Nader and Wallach, 1996; The Guardian, 1999). Clarke
(1996) argues that the current free trade regimes such as GATT and NAFTA1
have created global conditions in which multinationals and banks can move their
capital, goods and services freely throughout the world, unfettered by the
regulations of nation-states. In other words, the constant demands to ‘open up’
countries for ‘competitiveness’ and the rhetoric of ‘free trade’ that the
multinationals and the WTO espouse are just euphemisms for ‘plunder’ (Pilger,
1998). Other commentators are more positive about the role of the WTO,
which they suggest is at least a move in the right direction, because it provides a
system which can agree on trade rules and can put pressure on the rich countries
to open their markets. It could also be argued that freer trade has contributed to
the well-being of most economies in the post-war period (Marr, 1999). However,
this rather upbeat assessment may be called into question by the experience of
several Latin American countries since the dismantling of protectionist import-
substituting regimes (Dussel Peters, 1997).
Whether one sees multinationals as a force for good or evil, there seems little
doubt that they do have some influence on national governments and
institutions such as the WTO and that this influence has been increasing. Over
10 years ago, Dunning (1993) estimated that there were 20,000 multinationals
with foreign assets amounting to $1.1 trillion or 8% of gross world product and
total assets of over $4 trillion. At that time, they accounted for 25–30% of
combined gross domestic product (GDP) in all market economies, 75% of
international commodity trade and 80% of international exchanges of
technology and managerial skills. Over 5 years ago, UNCTAD (1994) reported
that multinationals employed around one-fifth of the world’s workers outside the
agricultural sector in the industrialised countries. The report also stated that the
total number of workers employed by multinationals across the globe was around
70 million, with some 29 million working for foreign subsidiaries. More recently,
Gorringe (1999) suggests that the ten largest transnational corporations control
assets that represent three times the total income of the world’s thirty-eight
poorest countries, which have populations amounting to over 1 billion people.
The leading 350 multinational corporations employ only a small fraction of the
world’s population, but they control 40% of global trade. These are staggering
statistics, perhaps even more so when one considers that through increased
merger activity the corporations are getting even bigger. Indeed, some
corporations are so large that they control more assets than do some nation-
states. If one compares national economies and corporations in this way, fifty of
the world’s 100 largest economies are in fact multinational corporations
(Gorringe, 1999).
This book focuses on the activities of one very large multinational and deals
in simplistic terms with the practical outcomes of an ideological confrontation.
One might use the analogy of a boxing match between two powerful opponents
trying to win points or a knock-out blow. In the ‘blue corner’, we have what
might be described as ‘the new Right’, the multinationals and big corporations, a
© 2000 Tony Royle
fair swathe of neo-classical economists, right-wing think-tanks and many
governments who are mostly interested in making the world economy safer and
more efficient for business. Those in the blue corner represent the continuing
demand for more ‘free trade’ and less regulation. In the ‘red corner’, on the other
hand, we have ‘the new Left’, a large number of NGOs of all sorts, those claiming
to represent ‘civil society’, the trade unions and those European institutions and
national governments that still engender some socialist principles.2 In most
mainland European countries, the social market economy still prevails. In these
countries, trade unions and employees still enjoy considerable rights supported by
national legislation that were by and large carved out during the post-war era.
We examine the ‘contest’ between one ‘heavyweight’ multinational, the
American McDonald’s Corporation, and the trade unions and national systems
of industrial relations in over twelve European countries. However, it is
questionable whether this is a fair contest or an equal struggle. Despite the
increase in the protests by NGOs, those in the ‘red corner’ arguably have the
odds stacked against them. The collapse of Eastern bloc-style socialism gave a
great fillip to those supporting the liberal economic agenda, and probably more
than at any time in the past multinationals enjoy a favoured position in the
world economy. In this context, the ‘contest’ begins to look more like a bout
between a heavyweight and a middleweight, and those in the ‘red corner’ appear
to be on the ropes. There have been some attempts to equalise the struggle in
the European Union (EU) through social legislation, but there is a powerful
lobby against such efforts. One need look no further than the failed Vredling
directive, which proposed to establish European Works Councils on a similar
model to that found in Germany. The proposal was quashed by opposition from
the European employer’s federation Union of Industrial Employers’
Confederations of Europe (UNICE) and the UK government (Hall, 1992).
Nevertheless, compared with the US-centred trade bloc North American Free
Trade Agreement (NAFTA), the EU has an obvious detailed approach and a
greater capacity to regulate multinationals, whereas NAFTA arguably has no
real desire to regulate at all and as a result has very minimal labour and
environmental standards. In our study of the McDonald’s Corporation, the early
‘rounds’ have already been slugged out over the last 30 years since the
corporation first entered the European market. We provide an analysis of the
points and the issues that appear to have been ‘won’ and ‘lost’ by the two sides
and we attempt to see if one side has the upper hand. Of course, the ‘contest’
between these contenders is not by any means over and, as we shall argue in the
following chapters, it is a contest which has considerable implications for
employment rights, both now and in the future. In particular, this is because
those in the ‘blue corner’ are bent on removing the state intervention that those
in the ‘red corner’ argue is essential if workers interests are to be fully protected.
Indeed, those in the ‘red corner’ are likely to argue for additional national or
supranational intervention to take account of the new scenarios created by the
growing power of multinationals and the increasing internationalisation of trade;
© 2000 Tony Royle