Expanding unofficial labor market demands regulatory agenda

Kim Jong Un observing work at the Sinuijiu Chemical and Textile Factory. Image: KCNA

The number of 8.3 Workers (referring to workers officially employed by state-run factories but who pay fees for permission to engage in other business) continues to rise in North Korea, calling into question the reliability of official employment statistics released by the government.

Multiple sources in South Pyongan Province reported to Daily NK that at the latest gathering of the Workers’ Party and People’s Committee of Pyongsong, the local Party head called attention to the rising trend of workers clocking in at state-run factories but in actuality leaving to trade at the markets. Many collective farms and business are reporting attendance rates of over 70%, but upon periodic visits to the sites, the authorities declared that “almost no workers could be found.”

The reason so many workers are abandoning their posts at state-run enterprises is because the wages are insufficient to cover living expenses, according to the sources.

The average monthly salary of a worker in a state-run factory is 4,000 KPW, while one kilogram of rice typically costs 5,000 KPW in the market. If official wages cannot be used to purchase even a kilogram of rice, the reality is that workers have no choice but to use unofficial means to survive.

When asked how many people come to Pyongsong from the countryside to work in the domestic services industry, and their monthly earning potential, one source in South Pyongan Province-based source said, “Those with money usually reside in Yokjon-dong (neighborhood), Jungdok-dong, Pyongsong-dong, Undok-dong, and Yangji-dong. The homes in these areas are where the new monied class ‘donju’ live and where one can find many female domestic workers.”

“In order to get hired,” she said, “one must know how to cook, be of clean appearance and maintain a high level of personal hygiene, and overall be appealing to the homeowners. Regular housework can earn a worker about 120,000 KPW (~15 USD) a month.”

The disparity in wages earned by these domestic workers in an unofficial capacity for the monied class compared to official labor at state-run factories soon becomes apparent. While such examples might not reflect all of North Korea’s unofficial labor market activity, it hints at the changing reality on the ground in North Korea.

In the city of Pyongsong, employment rates in the official state sectors continue to fall while private business, self-employed operations, and unofficial enterprises are all growing.

Pyongsong and other North Korean cities are also seeing burgeoning competition between unofficial laborers who are original residents of the cities and traveling workers from other areas. At general markets, restaurants, food vendors, and other shops, locals and outsiders often compete for work.

This has brought new challenges to the local workforce, which is increasingly confronted by outsiders who offer similar services. At the same time, at the markets, where competition has already been entrenched, the lack of labor regulation and related oversight has resulted in the familiar practice of hiring cheap outside labor to perform difficult jobs.

This means that the competition unfolding in North Korea’s labor markets is inherently unfair. Those who enjoy a close relationship with the authorities who oversee activity in their jurisdiction often exploit the informal system to their advantage.

Accordingly, individuals who officially earn the average income but are insiders with the local authorities are able to make more than most other citizens. This highlights the imbalances in the North Korean market system that are preventing it from becoming a high-functioning and efficient model.

Economic growth in North Korea depends on free, fair, and functioning markets, rather than pressure on managers and workers from the central government during on-site visits.  

The labor markets established in North Korea’s cities can now be seen as trending toward liberalization. Through close collaboration between the established markets and authority structure, the North Korean economy can potentially overcome the difficulties required to achieve the growth and development of a truly normalized nation.

*Translated by Nate Kerkhoff

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