North Koreans Make Less Money Than Their Counterparts at Kaesong

Local employees hired by foreign-invested companies inside isolated North Korea are earning much less than their counterparts who work at South Korean firms inside the Kaesong Industrial Complex, businessmen with knowledge of the situation said.

Foreign-invested companies pay local employees less than the U.S. $70.35 monthly minimum wage paid to the 53,000 North Koreans who work at the Kaesong Industrial Complex, the joint inter-Korean economic project north of the demilitarized zone, sources said.

Some North Koreans who work at the industrial park receive more than U.S. $140 a month when overtime is included, they added.

A Chinese-Korean businessman who operates a roofing material company and metal pressing company in the Rason area on the northeast tip of the country told RFA’s Korean Service that he pays his North Korean workers about 300 Chinese yuan (U.S. $47) a month. Other Chinese companies in Rason pay similar wages to their North Korean employees, he said.

A Chinese businessman who employs about 100 North Koreans at a mine he is developing in Hwanghae province said he pays his workers U.S. $60-$70 a month.

“There might be some wage differences at other foreign companies, but they are not that much different from the level of wages I pay,” he said.

The sources noted that some media reports published outside North Korea put the average monthly wage of workers in the Rason Special Economic Zone, set up by the North Korean government in the early 1990s to promote economic growth through foreign investment, at around U.S. $100. But this contradicts salary information provided by the foreign companies doing business there, they said.

“It’s a big problem paying the same wage rates to the workers dispatched unilaterally by the North Korean authorities [to foreign-invested companies inside the country] without determining whether they’re skilled or unskilled, or taking into consideration if they are men or women, based on the nature of the work they’re supposed to do,” one source said.

While those who work for foreign-invested companies in North Korea also receive an allowance for one meal per day, the sources said, they also log fewer hours than their Kaesong counterparts, because they often fail to report for work whenever authorities order labor mobilizations or electricity supplies are low.

Wage dispute

North and South Korea have been engaged in a months-long dispute over salaries at the industrial park after Pyongyang launched a unilateral bid in February to raise the wages of its workers by 5.18 percent to U.S. $74 a month. No agreement has been reached to increase salaries.

Seoul had rejected the bid, arguing that the move breached an agreement made 11 years ago that calls for the two countries to hold consultations on wage increases at Kaesong. The two sides previously agreed to cap annual wage increases at 5 percent.

The two sides held talks on the issue at the industrial complex on July 16 to try to resolve the months-long dispute, but failed to come to an agreement, South Korean media reported.

The Kaesong Industrial Complex opened in late 2004 for economic cooperation using the South’s capital and technology and the North’s workforce. About 125 small- and medium-sized firms operate factories there.

The industrial park is a source of income for the cash-strapped communist North and cheap skilled labor for South Korea, which uses North Korean workers to produce clothes and other labor-intensive goods.

Under laws at the industrial park, South Korean employers must pay cash salaries directly to workers, but North Korean authorities mandate that workers submit their salaries to the government for distribution, according to a commentary by Human Rights Watch in April. Workers, therefore, only receive a fraction of what they have earned.

Reported by Junho Kim for RFA’s Korean Service. Translated by Changsop Pyon. Written in English by Roseanne Gerin.