Kim Yong Gu (41), President of Skin Net, the first company to decide to pull out of the Kaesong Complex, said in an interview after making the decision, “I feel lighter.” Skin Net is a fur manufacturing company which rented manufacturing space in the Kaesong Complex back in September 2007, but has decided to get out after less than two years.
“With rumors circulating since August of last year regarding greater restrictions at the Kaesong Complex, orders from some buyers ceased completely. Following measures to restrict comings and goings from the Complex in December and the cutting off of transit routes altogether in March of this year, our overall sales have dropped by a third from last year,” Kim explained.
In a phone conversation with Daily NK on the 10th, a member of administrative personnel who has worked in the Complex for a number of years cited challenges to the viability of the Complex which have grown ever more difficult due to the inter-Korean relations stalemate: the wages of North Korean workers and the low level of enthusiasm for production among workers.
The workers’ monthly salary of $74 at the Complex is comparable to that in Vietnam, which averages $80. If the wage doubles as demanded by the North, the cost of labor will far exceed that in Vietnam. However, if productivity in South Korea can be represented by 100, then it is just 35 in Kaesong, so the wages would be unsustainable.
Defectors understand the predicament. Every firm in the world is bound to run into the kinds of small and large mishaps which have occurred in the Complex. However, there are not too many places where the workers and upper management systematically conspire to steal products to the degree they have in North Korea.
Such acts are clearly criminal. Depending on the company, degrees of theft vary, but for one company the percentage of output stolen is 12%, a quantity that can seriously undermine productivity. However, a special environment operates in North Korea where it is difficult to acknowledge them as crimes.
Some may regard the North Koreans as thieves. However, this does not really have much to do with the nature or disposition of the North Korean people. It could just be a means of survival, or to slightly improve a marginal existence. North Korea was not well-off before the food crisis, after all, and things are worse now.
In order for the North Korean authorities to maintain the slogan that “The state will watch over the lives of the people,” they have to at least provide rations long-term so that the workers can live. The North Korean authorities don’t do that, and furthermore they harvest the salaries of Kaesong Complex workers and provide just half of it to the worker him or herself.
At the most, workers see $40 of their income. This amount is equivalent to approximately 140,000 North Korean won according to the market exchange rate. But, to make matters even worse, North Korea applies the official exchange rate, which turns the $40 into just 5,600 won. Such a wage is barely enough to buy 2kg of rice in the jangmadang.
A family of four requires 30 kilograms of polished rice per month, but since a kilogram costs between 2,100 and 2,400 won, the monthly cost of rice alone comes out to between 60,000 and 72,000 won. Thus, even if the Kaesong workers work hard, their labors will not provide adequately for them or their families.
There is a play-on-words which was once popular in the North: “The National Security Agency embezzles money out of sight, the Social Safety Agency embezzles in safety, and cadres embezzle a lot boldly,” meaning that everybody who has power steals from the state, but it’s only a question of how and how much. People say that officials are “big thieves,” and workers, “small thieves.”
On the brink of starvation, officials and workers alike are too busy contemplating their own survival to worry about the sustainability of their actions. Only the officials embezzle public funds in the open; the workers, who have no rights, resort to steal in secret.
