Workers, trade unionists and politicians from five continents testify to Brazilian senate over allegations of tax evasion and unfair competition

This article is more than 5 years old

This article is more than 5 years old

The McDonald’s business model came under unprecedented global scrutiny in a hearing of the Brazilian senate’s human rights committee on Thursday.

Workers, trade unionists and politicians from five continents testified in Brasília, over low pay and poor working conditions at the fast-food giant.

McDonald’s is currently battling lawsuits in the US and Latin America, as well as a European Commission investigation.

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Adriana Alvarez, a McDonald’s cashier from Chicago, told the hearing that after five years in the job she receives just $10.50 an hour, and struggles to pay for her son’s childcare.

“When I look around at other McDonald’s workers who are here today from five different continents, I know that I am speaking not just for myself, but for hundreds of thousands of cooks and cashiers like me who are fighting for better jobs and better lives at McDonalds,” she said.

The senate hearing marked the culmination of a week of action that began last Friday, when Brazil’s General Workers’ Union filed a complaint with the public prosecutor’s office calling for a civil inquiry into allegations of tax evasion, unfair competition and the violation of franchise laws by McDonald’s and its Latin American franchisee, Arcos Dourados.

If found guilty, fines and penalties could amount to more than $342m. Anti-competition penalties could total 1% to 20% of the company’s gross profits.

The lawsuit also argues that the extent of McDonald’s control over Arcos Dourados’ financial, commercial and operational affairs breaks Brazilian law.

On Monday, McDonald’s workers held talks with three Brazilian government ministers over work practices in the fast-food industry. The following day, protesters succeeded in blocking part of Avenida Paulista, the main thoroughfare in the centre of São Paulo, in an attempt to draw attention to the company’s business practices.



The company has been under pressure in Brazil since February, when the country’s three largest trade unions filed a lawsuit against McDonald’s and Arcos Dourados, accusing it of “social dumping” – widespread and systematic labour abuses.

At Thursday’s hearing, Leonardo Mendoça, a prosecutor from Brazil’s labour ministry, announced the formation of a new taskforce to investigate McDonald’s working practices.

Lucas da Cruz Marques, 19, a former employee who testified at the hearing, said he was fired in July after raising complaints with his trade union over the company’s failure to pay overtime and the management’s demands that he shift heavy delivery boxes.

“McDonald’s is one of the biggest employers in Brazil, but it also has one of the worst records on workers rights,” Moacyr Roberto Tesch Auersvald, from the Nova Central trade union, said. Auersvald acknowledged that McDonald’s gives lots of young people their first opportunity in the job market, but he argued that many are exploited.

In a statement issued on Wednesday before the hearing, Arcos Dourados said that its more than 40,000 employees were represented by more than 80 trade unions and that it complied with all Brazilian labour laws.



“The company is proud to be the entry point for thousands of young people into the jobs market. Our work practices are prized and recognised by the market,” it stated, pointing out that it had recently been nominated as the 13th-best company to work by the Brazilian business magazine Época.

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Jutta Steinruck, a German minister for European parliament, who attended the hearing said the purpose of the campaign was not to “destroy a company like McDonald’s” but to ensure that it offered “jobs with dignity”.

She also drew attention to the European commission’s preliminary investigation into allegations of tax evasion. “McDonald’s has the power to play a positive role in the European economy. But instead, it has created a tax scheme designed to pad its own profits by dodging taxes throughout Europe.”

Paulo Paim, the senator from the ruling Workers party (PT) who organised the hearing, said that union representatives from 20 countries had expressed concern over working conditions at McDonalds.

“Trade unions in Brazil took it upon themselves to bring their concerns to the human rights committee,” he said. “This gave other countries the same idea, but perhaps they do not have this same route [of a senate hearing] available to them.”

McDonald’s is the second-largest private sector employer in the world. Scott Courtney, from the Service Employees International Union (SEIU), the labour organisation which has played a key role in the lawsuits filed against the company in the US, said the hearing showed how McDonald’s was responsible for driving a global race to the bottom.

“McDonald’s has a choice – it can continue dragging down standards nearly everywhere it operates, or it can use its considerable power and influence to help improve the lives of workers around the world. Today’s hearing shows that there is a global consensus in support of McDonald’s stepping up and leading a better way forward.”

Additional reporting by Amanda Moreth.