Others thought their businesses would be harmed.

"The prices of supplies are now rising and I will feel even greater pressure if I have to pay more money to my employees," she said.

Liu Guoliang, head of Wuhan Catering Association, who represents employers, said union officials submitted the contract to the Wuhan bureau of human resources and social security on April 23 and are now waiting for an approval.

Liu Qixin, deputy head of Wuhan Federation of Labor Unions, said there are nearly 40,000 catering businesses in the city, 84 percent of which are small or medium-sized. Such businesses tend to pay employees as they see fit and do little to protect workers' rights.

In Wuhan, workers in the catering industry earn wages that are low when compared with the pay that goes to workers in other industries. As a result, the industry finds itself having to cope with a serious labor shortage, he said.

Liu Guoliang said some restaurant owners at first strongly opposed the contract because they could not get comfortable with the thought of paying the wages demanded by workers.

Both sides in the negotiations later agreed to compromises, he said.

Liu said about 40 percent of the large and medium-sized catering businesses in Wuhan pay wages that are higher or equal to the amounts called for by the contract, while the rest will have to pay more if the agreement is approved.

"In the short run, some small enterprises, around five percent of the total, which pay low wages to their employees and are prone to business risks, would possibly close down," he said. "But the contract would go far to improve the management of the industry and alleviate the labor shortage."

Authorities with the local labor union said they will carry out spot checks to ensure the terms of the contract are being abided by. They said the names of violators will be placed on a blacklist.

During the next three years, the All China Federation of Trade Unions plans to bring collective bargaining over wages to all businesses in the country.