The North Korean regime skims a massive portion off the wages of workers at the joint Korean Kaesong Industrial Complex, leaving them with less than US$2 per month, a report says.
Marcus Noland of the Peterson Institute for International Economics made the claim in a report titled "Labor Standards and South Korean Employment Practices in North Korea" released on Tuesday.
"At the time of its closure in April 2013, the minimum wage at the [complex] was $67.05 per month, and once all payments and bonuses were accounted for, the average wage was $130," Noland said. "The North Korean government was thought to retain roughly 30 to 40 percent of this payment, ostensibly to cover social security payments, transportation, and other in-kind benefits."
"While South Korean firms pay in US dollars, North Korea pays the workers in North Korean won converted at the widely overvalued official exchange rate," he added.
"Evaluated at the more realistic black-market rate, North Korean workers may have been netting less than $2 per month," Noland said. "Monthly after tax wages might purchase roughly 2-3 kg of rice."
A Unification Ministry official said the claim is exaggerated. "It's true that North Korean authorities take $50 from each worker's monthly wage of $130 and pay them 8,000 North Korean won after converting the remaining $80 at the official exchange rate of 100 won per dollar. But Kaesong workers are guaranteed a real purchasing power of $80 because they can buy daily necessities and home appliances at the official exchange rate in a goods supply center instead of the black market."