by Cat on October 24, 2006
A new report from South Korea’s Ministry of Commerce, Education and Industry documents what most people have suspected for some time. North Korea keeps most of the wages of the workers in the Kaesong Industrial Complex, giving the workers only about the equivalent of $10 out of the $57.50 monthly salary for each worker paid by the South Korean companies.
More than half the salaries paid to North Koreans working at the inter-Korean Kaesong Industrial Park go to the North Korean Workers’ Party, a document written by a team in charge of inter-Korean economic cooperation at the Ministry of Commerce, Industry and Energy shows. The team reported to the unification minister.
Grand National Party lawmaker Kim Gi-hyeon made the document public on Sunday. According to the memo, US$30 out of the monthly pay of $57.50 goes to the Workers’ Party. With $17.50 spent on insurance and other costs, North Korean workers at the complex are left with only $10 a month.
This shouldn’t be too much of a surprise since part of the deal with North Korea to open the Kaesong complex involved paying the “wages” not to the workers directly, but to the North Korean government, which is supposed to pay the workers in turn.
What is shocking is that the estimated $8-$10 the workers do get is double the average monthly salary of most North Koreans.
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Update: The U.S. and South Korea failed to reach an agreement on Kaesong products in discussions on Monday. The issue has been tabled until next month. Negotiations on the other issues–including car and pharmaceutical imports–are continuing this week.
Andrew Leonard at How the World Works has an interesting post up about friction between the U.S. and South Korea over the products produced at Kaesong Industrial Park.
The U.S. position is that Kaesong products are North Korean, and thus should be excluded from preferential access to U.S. markets. Anything else would undermine U.S. attempts to restrict North Korean access to foreign currency. (As a side benefit, intransigence on the issue covers the U.S. flank against U.S. labor unions that will complain that South Korean capital is exploiting cheap labor to gain an unfair trade advantage. But it will take some chutzpah for U.S. trade negotiators to argue that the South Koreans should be condemned for such a practice when that has been one of the core operating principles for U.S. manufacturers for many decades.)
Leonard points out that the U.S. position ignores the role that the South Korean goverment hopes Kaesong will play in “engaging” North Korea and opening up possibilities for future investment. However, he also notes that the North Korean workers at Kaesong give new meaning to the term “slave labor.”
Not only will North Korean workers be paid a mere $57.50 per month — just 3 percent of the prevailing wage down south — but that money goes directly to the state, which then reimburses the workers. No one really knows how much the workers end up getting, and you sure won’t find out by asking them directly. Press reports say there is no socializing between workers and management, and very little opportunity for the North Koreans to do anything but, uh, work.
The question, as Leonard sees it, is whether the exploitation of these workers will be worth it in the long run.
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