A year and a half has passed since the North Korean cabinet issued a directive to “increase statutory wages paid monthly to workers in institutions and enterprises.” Economic experts note that while workers’ wages have increased 10 to 20-fold, income inequality is growing because these increases haven’t been implemented uniformly across the country.<\/p>\n
Party officials and employees at top-tier enterprises who previously earned less than 5,000 won per month (insufficient to buy even 1 kilogram of rice at market prices) are now reportedly earning between 30,000 and 150,000 won monthly.<\/p>\n
The issue is that wage increases haven’t been applied consistently across all workplaces. Even where raises have been officially mandated, many workers simply aren’t receiving the higher pay. Wage arrears are common, and some enterprises continue to pay pre-increase wages.<\/p>\n
As a result, employees at smaller enterprises, new hires, or ordinary workers who aren’t officials see little benefit from the wage increases. Some “8.3 workers” (who pay a fee to avoid workplace attendance while pursuing private business) reportedly don’t even know wages have increased.<\/p>\n
Ji-young Choi, research fellow at the Korea Institute for National Unification, explained, “While the wage increase itself didn’t cause polarization, government and party institutions operating on budgets are more likely to pay wages properly. In contrast, most enterprises operating on independent accounting systems pay wages irregularly.” She added, “Low-profit enterprises haven’t implemented noticeable wage increases, widening the income gap between citizens who received raises and those who didn’t.”<\/p>\n
Since North Korean salaries were largely symbolic before, wage increases at only some institutions create stark disparities.<\/p>\n
Jin-wook Nam, associate research fellow at Korea Development Institute, noted, “Since wages haven’t increased for everyone, those who received no increase or only minimal raises have seen their real wages decrease compared to rising prices.”<\/p>\n
While party officials and workers at large enterprises with substantial raises don’t feel inflation’s pressure significantly, workers at small and medium-sized enterprises may experience decreased purchasing power.<\/p>\n
Evidence of consumer polarization is mounting in North Korean society, with reports of wealthy citizens in urban areas spending the equivalent of 300 kilograms of rice on a single spring jacket.<\/p>\n
However, the inflationary effect of wage increases isn’t expected to continue indefinitely. Choi noted, “Since this was a one-time wage increase, continued price inflation is unlikely. When North Korea introduced their ‘our-style economic management method’ in 2012 and raised official prices, market indicators rose briefly before stabilizing for an extended period.”<\/p>\n
Nevertheless, North Korea’s external economic conditions have deteriorated since 2012. Authorities have banned private foreign exchange transactions and strengthened market controls, intervening more directly in the economy. These actions will likely undermine market stability.<\/p>\n
Choi pointed out, “North Korean authorities increased wages to stimulate domestic consumption, but historically, crackdowns and controls have never successfully stabilized market indicators.”<\/p>\n