Compare and contrast the similarities and differences between work and employment relations in the fast food industry in Singapore with work and employment relations in the fast food industries in Germany and the United States. How would you explain those similarities and differences between Singapore and the other two countries? Introduction The fast food industry, and McDonald’s in particular, have come to be regarded as emblematic of a new global culture (Leidner, 2002, pg 8). McDonald’s operates in almost the same way wherever its stores are located.
Ray Kroc, the founder of McDonald’s, emphasized that a standardized approach to food production and customer service is the key to commercial success (Love, 1995 p114). Some argue that McDonald’s is the reason there is a fast food industry (Love, 1995 p25-27). In Singapore, although McDonald’s was not the first American-styled fast food restaurant to establish operations, their arrival has paved the way in developing the modern fast food industry and is currently the market leader.
In this essay, McDonald’s will be used as an exemplar to examine the work and employment relations in the fast food industry, particularly Singapore, Germany and the United States. Standardization Franchising is prevalent in the fast food industry as there is minimal risk in setting up a small business. Franchisees are separate legal entities and can hire their own employees at their own discretion.
To ensure that outlets across the country maintain the same standards, the franchising strategy of McDonald’s requires that franchisees implement operating principles detailed in a 600 page procedures manual and used products and equipments from company approved distributors. The specificity of detailing work routine is remarkable. For instance, workers are instructed in the exact arm movement when salting a batch of fries in McDonald’s in Singapore and the States. Therefore, consistency of food standard is maintained even though there are numerous franchises across the countries.
Technology plays an important role in standardizing the work of fast food crew and reducing the amount of skill and prudence required of workers. Fast food companies, achieved this through the use of equipment and machinery, ranging from the processes of preparation, cooking and serving of the food right up to the systems of ordering of stocks, staff planning and training. For example, McDonald’s in Singapore and the United States have grills and fry vats specially designed with lights and buzzers to tell workers when to proceed with their next step in their routines.
Frozen food products are used such that they need only be heated, rehydrated or assembled. Cash registers are computerized so that workers do not need to memorize the prices of the food items. Computerized systems have also standardized managerial work such as scheduling work shifts and monitoring sales and inventory. As evident above, by optimizing work processes through the use of technology, uniformity of food and service can be achieved, maximizing cost efficiencies. Interactions between customers and crews are standardized to ensure that customers have a pleasant experience.
Crews are expected to greet the customer with a friendly smile, using scripted lines while maintaining eye contact. Customer’s behaviors are also standardized. The awareness and readiness of customers to perform their part of the routine accounts for the smooth functioning of the outlet. They are expected to order promptly and do their fair share of the work known as self service, for example bringing their own food to the table. This is known as ‘work transfer’: shifting work that might be done by paid employees to other people (Glazer, 1993).
These standard practices can be seen in McDonald’s in Singapore and the States. Ray Kroc believed that standardization maximizes cost efficiencies, thereby contributing to the extreme standardization of work in today’s fast food industries. Workforce The extreme standardization of work affects the employment policy of the fast food industry. Characteristics of the workforce also resulted in high labour turnover. The fast food industry employs its workforce mostly on a part-time or casual basis.
Many of the workers in the sector are students who may be involved in full-time education, and social and sporting commitments. This resulted in high labour turnover. Such work is frequently undertaken as a means of gaining autonomy, financing hobbies and interests and establishing a broader social network (Tannock, 2001 p110). This phenomenal is typical of fast food industry in Singapore and the States. Job prospects in fast food industry seemed bleak. In Singapore, the highest level in which a crew can be promoted is crew leader (equivalent to a crew trainer).
Further promotion into managerial levels would require the acquisition of higher education. In the States, crew can be promoted to a ‘crew trainer’ or a ‘crew chief’. They can also be promoted to the lowest level of store management, ‘swing manager’. However, this position requires full time work which most students could not qualify. As evident above, there is little career path for the crews which could possibly result in high labour turnover. Wage compensation in the fast food industry is generally low.
In Singapore, crews are remunerated on an hourly wage rate of ten percent higher than Singapore’s minimum wage level. However, this amount is not high as can be seen from the statistics in 1998, revealing a full-time crew’s pay to be around S$800 to S$1,400, depending on the number of hours worked. Incidentally, part time crew would work lesser hours which would translate to a significantly lower pay. Statistics from the States had shown that in 1998, the median hourly wages for fast food workers were $6. 00 an hour for “Cooks, Fast Food”, compared with a minimum wage of $5. 15 (BLS, 1998).
In Germany, the pay of majority of fast food workers is still low when compared with similar skills and jobs in other sectors. As evident, the remuneration for fast food workers is generally low, possibly contributing to the high labour turnover. Working hours of a crew is another factor for consideration. In Singapore, working hours are flexible which catered to the different group of crews. For instance, students were offered slots during the weekends so it would not affect their school attendance. The ‘core’ crew would be redeployed during the evenings and during early breakfast hours.
Retirees could work part time for short hours during the weekdays, while housewives worked during the weekday hours so they can spend quality time over the weekends with their families. In the States, working hours are variable, however, there are reports of unfair scheduling. Also, crews in the States work for short periods of time, for which they are not paid, for example, working through break time, ‘helping’ co-workers before or after their own shifts and doing preparatory work’. Therefore, the variable working hours and unstable pay in the fast food industry could possibly result in a high labour turnover.
Apart from low wages and variable working hours, the benefits given were minimal. In Singapore for instance, trips to Johor Bahru are organized for the older crew. Annual parties at discotheques were organized for younger employees. In the States, to attract workers to work in suburban areas, private transportation have been provided and bonuses were offered to workers willing to spend a year working in Disney World in Puerto Rico. Though the benefits differ, but one point is common – is that they are nominal. The changing face of workforce resulted in a shift of the employment relations policy.
In the 1990s, Singapore’s McDonald’s faced a problem of shrinking numbers of ‘secondary school leavers’, therefore the company increased its starting salary range. It recognized that majority of their restaurant managers were graduate, the company began treating them more like ‘professionals’ and organized more ‘management’-oriented seminars and conferences. By late 1990s, ‘older’ crew members accounted for 40 per cent of all employees in McDonald’s restaurants in Singapore. This is due to a lack of the main group of employees –students, when McDonald’s began expanding its operations.
They found another group of people from an equally low position in the segmented labour market to replace the students – the elderly, who are less likely to be able to secure employment in other sectors. The older crew joined McDonalds on a part time basis which includes housewives. In the States, fast food employers addressed the problem of worker shortage by expanding their recruitment efforts. The implementation of ‘welfare reform’ meant that many poor single mothers who previously could rely on state support are required to find jobs (Leidner,2002 p24-25).
Employers earn tax credits for hiring such workers. Furthermore, fast food companies increased pay and introduced new fringe benefits like being ‘eligible’ for vacation time, health insurance and dental benefits. They even came up with bonuses for bringing in a new employee. As can be seen, Singapore’s strategy towards the declining student workforce is to hire housewives and older people whilst the States is supportive of single mothers finding a job in the fast food industry.
In contrast, many of its crew members in Germany consist of foreign labour, economic migrants from old Eastern Bloc and guest workers predominantly sourced from Greece and Turkey. Union membership Crew members in Singapore never considered collective representation, as they were fairly satisfied with their current terms and conditions and the absence of mandatory union membership. Similarly, in the States, there is a complete absence of trade unions. In contrast, German system provides workers with statutory rights to representation through works councils and supervisory boards.
This dual system operates on the basis of free collective bargaining and works council system, unlike Singapore where there are no compulsory obligation to join a union. In Singapore, McDonald’s have their own human resource management programme (HRM) to pre-empt the need for collective representation and bargaining, allowing the company to address each employee’s need. There appears to be some evidence that the HRM programme in Singapore is effective as most of the crew who were interviewed reported they did not feel exploited or nderpaid, in fact many were satisfied with the terms and conditions of their employment (Pereira, 2002 p144). For Germany to pre-empt collective representation, they used management ‘flying squad’ of troubleshooters who specialized with dealing with employees who wanted a works council. They would start with persuasion, then proceed with threats of dismissals. Despite the fact that German unions has high level of acceptance among the employers, McDonald’s had refused to negotiate a collective agreement. However, subsequently, McDonald’s established a new employer’s federation, with other fast food employers.
It is questionable as to whether McDonald’s really accepted unions or accepts them just to stop public criticisms. As can be seen, McDonald’s approach to unions differs in Singapore and Germany such that Singapore’s approach was to introduce HRM policies to attend to employee’s needs whilst Germany’s approach is to incorporate a union. Laws In Singapore, the Industrial Relations Act gave more power to the employer by excluding issues such as promotion, transfer, retirement, retrenchment, dismissal and work assignment, leaving them to be negotiated between the employers and employees (Pereira, 2002 p138).
The Employment Act stipulates the terms and conditions of employment which provided for a 44 hour work week, 7 days paid annual leave, eleven public holidays, 28 days paid sick leave, two months paid maternity leave and an overtime rate of time and a half and double time on Sundays and public holidays (Perry et al. , 1997 p55). Singapore’s labour laws allowed employees to choose whether or not they wanted to join a union (Tan, 1995). In contrast, the legal principle governing employment relations in the States is ‘employment-at-will’, which means that employers can sack workers anytime, with several specific exceptions.
However, employers may relinquish the power to sack workers at will by agreeing to other employment terms. The right to form unions is guaranteed by law. However, paid vacations and maternity leave are provided at the discretion of American employers, unlike Singapore. In Germany, pay and benefits are negotiated through collective agreements by the works council. The absence of works council in most fast food restaurants would suggest that workers might be short charged on their pay and benefits. This is in contrast with Singapore’s system whereby the Employment Act provides for employee’s pay and incentives.