SHANGHAI, China – Amid allegations that McDonald’s and KFC restaurants in China have been underpaying employees, the two fast food companies are expected to allow the establishment of labor unions, officials in China announced Friday.

A Chinese-run newspaper reported recently that McDonald’s in the Guangdong province was paying employees just 52 cents an hour, far below the 97-cent minimum wage established for that province.

KFC reportedly paid its employees 61 cents and Pizza Hut reportedly paid its employees 65 cents per hour, according to the report.

Each province in China is allowed to set its own minimum wage requirements.

McDonald’s in China has denied it violated the minimum wage law. Conflicting reports this week had China’s state-affiliated labor union – the All-China Federation of Trade Unions (ACFTU) – announcing both McDonald’s and Yum Foods, parent company of KFC and Pizza Hut, agreeing to allow labor union branches in the restaurants.

The Chinese government does not allow for workers to organize, but the ACFTU is given some leeway to establish labor guidelines within foreign companies and to assist with confrontations between management and employees.

Some 25 million Chinese workers are said to be employed in foreign companies there.

Chinese labor officials have said they are continuing to investigate the newspaper’s allegations of underpaid workers.

The state-run Xinhua News Agency reported Thursday that McDonald’s already had agreed to the labor union branches but McDonald’s officials denied having made a decision.

Officials with McDonald’s and Yum Brands Inc. did confirm they still were seeking more information on labor compensation agreements. A report from China’s labor bureau was expected later this month.

Despite the investigation, McDonald’s reported a 5.7 percent increase in global sales in March, 12.3 percent in the Asia/Middle East market – increases attributed to the release of new food products in those markets.

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