I.
On December 6th, North Korea unilaterally
eliminated the 5% cap on wage hikes for North Korean workers at the Kaesong
Industrial Complex. Ostensibly, the abolition is intended to boost profits of
the regime despite difficulties in hiring more employees to work in the
industrial zone, but this unilateral action goes deeper. After
the five-month shutdown of the highly-symbolic joint manufacturing zone last
year during a period of heightened tensions on the Korean Peninsula, South Korea
worked to implement institutional measures to prevent such incidents from
happening again. The two Koreas agreed to ensure “normal operations of the
industrial complex including safe passage of South Korean personnel,
stable working conditions for North Korean workers, and the protection of corporate
properties,” while also planning for the discussion pf practical issues by the Inter-Korean Joint Committee. However, blatantly disregarding the agreed-upon terms, North Korea unilaterally announced its decision to remove the cap
on wage hikes.
Proponents of the Kaesong Industrial
Complex argue that they can think of no better option for South Korean SMEs to flourish. In
addition to low wages–on par with those in Cambodia and Myanmar–the lack of
communication barriers makes it easier for the workers to quickly learn the
skills they need, providing inarguable benefits to South Korean SMEs. Moreover,
those who support expansion of the industrial park stress the symbolic
importance of the KIC as the last pillar of inter-Korean cooperation, claiming
it will help raise awareness on a host of issues for its some 50,000 workers and improve perceptions of the North Korean people regarding its neighbor to
the south.
Conversely, KIC carries as many cons as it
does pros. Companies and public officials in charge of running the complex
stress the importance of corporate profits and job retention for the complex’s
workers, but these companies warned the Park Geun Hye administration
that if it allowed the industrial park to shut down permanently, it would gain nothing but notoriety, despite
the fact that North Korea attributed the closure to the annual U.S.-South Korea
Joint Military Exercise. These are shallow accusations; in effect, they support North Korea’s attempt to shift the blame for suspension of operations onto
South Korea. As a result, North and South Korea agreed that both sides will be
held responsible for any recurrence of similar events– a classic “wag the dog” situation.
Additionally, the Mulmangcho Human Rights
Research Center notes that North Korean employees only receive a fraction of
the wages and bonuses actually paid out by South Korean companies. South Korean enterprises pay wages in USD, but North Korea applies the overvalued official exchange rate to this value before releasing it to the workers. Marcus Noland, an expert
on North Korean economics, said that only one out in five South Korean
companies located within the complex have knowledge of the salaries earned by
North Korean workers. This has not surfaced as an issue because KIC’s workers are paid significantly more than workers in other regions of North Korea. Yet, the hard truth remains that South Korean
SMEs and the South Korean government neglect labor exploitation by the North
Korean regime and help funnel funds right back to the autocratic leadership–a
practice condoned for the sake of alleged trust-building and mutual
cooperation. In this untenable situation, it makes little sense to expect any
rational U.S. and European companies to invest in the complex. [Groz-Beckert, a
German producer of industrial machine needles, has set up a sales office rather
than a production line to sell his product to the companies within the
complex.]
In this regard, it was appropriate for
South Korea to order the withdrawal of Korean resident employees from KIC last year, as the cause of “trust and cooperation” that had once kept
the complex up and running lost its validity when North Korea unilaterally decided to block entry to the facilities and detain South Korean workers. Of major issue now is the fact that South Korea will be left without any viable alternatives if
North Korea reneges on the agreement it made with South Korea to
prevent such events from recurring–a point already elucidated while both sides
worked out an agreement to reopen the industrial zone in August 2013. How,
then, can we approach this possible scenario?
Above all, the South Korean government
should not interfere in the operation of KIC going
forward. After all, wage increases should be decided based on the negotiations
between South Korean companies and North Korean employees. Wage decisions
should be left in the hands of South Korean businesses, even in cases
where the North Korean authorities need to participate in negotiations on
behalf of their employees. It is up to South Korean companies to decide whether
to accept North Korea’s demand for excessive wage increases. The South Korean
government’s discussion over wage hikes or wage control with the North Korean
authorities, if continued, only serves to politicize the issue of the
industrial park itself. As a result, the industrial zone is being used as a
political weapon by North Korea, with the South Korean government devolving
into a target of criticism by companies operating within the complex for the
prolonged shutdown. Compounding these issues are former officials of the Ministry of Unification–currently running the complex and blinded by tunnel vision.
The South Korean government does not have
to move forward to resolve these three issues: passage, communications, and
customs clearance. North Korea should be held responsible for any failure to
deal with these matters if South Korean and foreign companies lose their
interest in the industrial park as a result. So far, it seems readily apparent
that North Korea has maintained the industrial complex solely for the purpose
of generating profits and is not sincere enough about fulfilling the five
conditions laid out for the revival of KIC last year. Therefore, the South Korean government’s influence on the operation
of the industrial zone will only exacerbate the situation. In particular, the
South Korean government cannot be free from the accusation that it is
neglecting worker exploitation by the North Korean regime if it continues to be
involved in the management of the complex.
II.
However, we should go further than placing
full responsibility in the hands of businesses on how to respond to North
Korea’s unilateral action. The North Korean regime’s demand for a pay raise for
KIC workers aims to make the South Korean government the
main culprit, threatening the survival of the North Korean workers as the human rights situation, and those responsible for it, continued to be pursued by the UN. Against this backdrop, it is highly likely that Kim Jong Eun will push ahead with the launch
of intercontinental ballistic missiles [ICBM] and a fourth nuclear test. The North Korean regime is well-versed in the art of
securing dominance and achieving a breakthrough in these kinds of situations.
Those who are well aware of the seriousness
of the North Korean nuclear issue express doubts about whether the Park
Geun-hye administration’s policy toward North Korea can actually solve the
matter. The current administration’s policy relies on the good faith of North Korea and its neighbors– including South Korea– but fails
to specify a binding obligation to realize such a situation. More precisely, the South
Korean government shows no leadership in tackling the threat of North Korean
nuclear development.
The Park Geun Hye administration should respond
in a different manner if Pyongyang seeks to gain control by launching intercontinental ballistic missiles [ICBM]and holding an additional nuclear test. These would serve to reignite tensions on the Korean Peninsula over a range of issues, including
wages for North Korean workers at the KIC and pressure on North Korea’s human rights record from the UN and the international community. These factors make it imperative that South Korea and its
allies to deter North Korean aggression through every possible
means–diplomatic or otherwise.
*Views expressed in Guest Columns do not necessarily reflect those of Daily NK.
