This is “NK Market Trends,” bringing you weekly
updates on the North Korean economy. Today, we have
reporter Seol Song Ah joining us for the show to look at
how people are hired for work within grassroots market economy and what kind of relationship
they maintain with their employers. To start off, what are the restrictions on hired labor for personal business endeavors in North Korea?
Hiring other people for work in the North
is considered an element of capitalism, making it one of the most strongly
restricted practices on paper. This is because the state seeks to maintain its singular grip over the allocation and regulation of labor, and by extension, the population. But in practice, as most everything in North Korea, the situation is vastly different. Private
hiring is a burgeoning domain.
Last week I told you about young women and
students being employed by shoe manufacturers, right? In this case, they’re not
managed by the labor department of state-run enterprises. They’re homemakers or
students who are looking to make some money for themselves. If individual
proprietors want to bring state-run enterprise workers into the fold, the laborers
must pay a portion of their earnings back to the enterprise to receive
approval. These workers often wear two hats, splitting their time between their assigned workplace and the rapidly expanding private domain.
How does the hiring process differ between
sectors?
There are a lot of differences. But to put it simply,
factory managers and workers are assigned to state-run firms irrespective of their desire to pursue that line of work or not.
On the other hand, when individuals hire
workers, they need to reach a mutual agreement for a deal to take hold. To put this into context, say, for example, Kim Jong Un were to order more construction at the Mt. Paektu Youth
Power Plant. In this case, young workers in their 20s would be assigned as storm
troopers to carry out the work.
But if you were to think of a scenario in
which a purveyor of baked goods is hiring someone for work, he or she would naturally seek a meticulous, congenial candidate for the job. Female 20-somethings are often the most popular demographic to hire in this industry. Interestingly, however, if workers don’t like their
employer, his or her standing as a wealthy donjuLiterally "masters of money," donju refers to people who hav... More [new monied class] notwithstanding, they turn down the offer. These attitudes are changing the fabric of the private labor market–prioritizing work performance, production quality, and employee welfare– and therefore making it an increasingly attractive option for many North Koreans.
Could you expand a bit on the role of
performance and welfare in this grassroots market system. How is it shaping business
practices in North Korea?
It’s what characterizes the nature of the
employer-worker relationship. I’ll give you another example in the bakery world. There
was an individual operator selling bread and cookies in South Pyongan Province,
and she used to employ women in their teens and 20s at her shop. In the beginning, she would pay workers a kilogram of rice for a full day of work [eight hours,
excluding an hour for lunch]. But output was poor under this system because a lot of workers didn’t work hard, doing the bare minimum until they could clock out. To alleviate this issue, the owner began paying workers according to individual output.
Needless to say, workers started furiously
churning cookies out without attention to detail, increasing output but also incidence of defective products. The manager dealt with this by deducting the costs associated with faulty goods from worker salaries. As you might guess, this was very
effective! Workers were far more fastidious, especially with managing the oven
temperatures and minimizing defective merchandise. This significantly bumped up
quality and yield, and there was no waste. Any products with flaws that
couldn’t be sold were set aside and distributed to workers on their birthdays
or national holidays.
Incidentally, Kim Il Sung’s birthday is just around the
corner, on April 15. This is a time when you can see a surprising difference in fringe benefits offered to workers by the state relative to private operators, and this wide disparity becomes a point of comparison when weighing the relative merits of capitalism and socialism.
That’s really fascinating. I hope people in the
North can use those opportunities to differentiate the two
systems.
In the North, there’s a saying, “Cows that
have eaten are the ones that work.” You can apply that to the upcoming holiday. Kim Jong Un can’t
provide the population with sufficient rations yet demands from them backbreaking work and unwavering loyalty, especially ahead of major events [like Kim Il Sung’s birthday]. The more he pushes them with no reciprocity, the more he chips away at their loyalty– little by little.
A day prior to big holidays like this,
workers from foreign currency-earning companies and day laborers working for privately-run ventures bring home meat, sweets, flour, oil, and other supplies on
their bicycles or in their backpacks. This often incites envy and anger from state-run factory workers, who typically only receive a lone bottle of alcohol–if anything at all. This gaping disparity gets people thinking about the positive influence open markets and economic reforms could have on their quality of life.
I’m sure state authorities are aware of
these sentiments. Wouldn’t they want to place restrictions on these private
practices?
They do, of course. It would be great if
workers who get paid a paltry 3,000 KPW a month–insufficient to even purchase one kilogram
of rice–could work freely at a trade company or private venture. But during his rule, Kim Jong Il declared private employment
illegal and penalize such practices. The decree, announced during the mid-2000s, singled out shoe
manufacturers and bakeries, which hire dozens of workers, as “breeding grounds
for labor exploitation.”
Crackdowns on students were carried out by
school youth groups, young female workers by youth alliances, and employers by
local people’s safety officials. But this led to rampant bribery for tacit approval, thereby growing this market rather than stymieing it.
Under such conditions, the donjuLiterally "masters of money," donju refers to people who hav... More have now come to collaborate with factory cadres by
hiring workers from state-run entities for projects like home construction. So the
labor market exists in a murky area where the legal and illegal coexist and, more often than not, converge. But more
on that next week!
That was some great insight into North
Korea’s private employment market. Finally, let’s take a
look at how market prices are doing in the North this week.
We’ll start off with the week’s* rice
prices, the foreign exchange rate, and other price fluctuations. Strong
sanctions are still in place, but prices have remained stable in central
regions.
The price of 1 kg of rice was 5,150 KPW in
Pyongyang, 5,100 KPW in Sinuiju, and 5,050 KPW in Hyesan. The cost of 1 kg of
corn kernels was 2,100 KPW in Pyongyang, 2,180 KPW in Sinuiju, and 2,200 KPW in
Hyesan.
The USD was trading at 8,130 KPW in
Pyongyang, 8,150 KPW in Sinuiju, and 8,070 KPW in Hyesan. The Renminbi was
trading at 1,280 KPW in Pyongyang and Sinuiju, and 1,270 KPW in Hyesan–mostly
similar to last week.
Moving along, 1 kg of pork was selling at
11,700 KPW in Pyongyang, 12,000 KPW in Sinuiju, and 12,500 KPW in Hyesan.
Gasoline was trading at 7,300 KPW per kg in Pyongyang, 7,250 KPW in Sinuiju,
and 7,400 KPW in Hyesan. Finally, 1 kg of diesel fuel was selling at 5,600 KPW
in Pyongyang, 5,450 KPW in Sinuiju, and 5,350 KPW in Hyesan. This has been a
rundown of the latest market prices in North Korea.
*This segment reflects conditions for the week of March 28-April 1. (The English translation of the market report is published a week after the release of the original Korean version.)
