North Korea Relaxes State-Control Over Workers’ Salaries
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The North Korean government last month introduced a new economic scheme that theoretically allowed companies to pay their workers more for better productivity, reported the Associated Press on Monday.
Nonetheless, a government economist said that the move was not a sign that the communist state was gradually adopting a capitalist free market system.
The North Korean government last month introduced a new economic scheme that theoretically allowed companies to pay their workers more for better productivity, reported the Associated Press on Monday.
Nonetheless, a government economist said that the move was not a sign that the communist state was gradually adopting a capitalist free market system.
Ri Ki Song, a professor at the Institute of Economics at North Korea’s Academy of Social Sciences in Pyongyang, revealed to AP that the new policy gave companies more freedom in determining wages, but insisted that companies were still obliged to set aside profits for state purposes.
[quote]”This is nothing to do with reform and opening. As I’ve said, the socialist ownership of the means of production is firmly established in our country, and we defend this,” Ri said.[/quote]Only “after repaying the state for its investment, enterprises can set salaries themselves, regardless of salaries fixed by the state, and pay workers according to their performance,” he elaborated.
Until recently, most salaries were set by the state. According to an Asia Times article last year, the average North Korean worker earns around 2,000-6,000 wons a month, at an official exchange rate of 135 won per U.S. dollar. However, the real market rate currently fluctuates around the 3,400 won per U.S. dollar, reported the Asia Times, therefore, the official salary is between $0.50 and $1.50 a month.
AP noted that the latest wage reform followed a similar move last year to give managers at North Korean farms more power to make management decisions and to allow farmers to keep any surplus harvest to sell or barter instead of turning them over to the state.
Ri added that the new policy on salaries only went into effect after a trial period.
[quote]”In the past, the state used to fix standard salaries, which meant you couldn’t pay more than a certain amount,” he said. Now “individual workers who work more can earn more,” he added.[/quote]Analysts have been observing North Korea policies since Kim Jong Un came into power in December 2011 for signs of economic reform. In a rare New Year’s Day address delivered on state television this year, Kim had vowed to make a “radical turnaround” for his country’s economic policies in 2013, including improving the living standards for citizens.
Related: North Korean Leader Calls For “Radical” Economic Shift, Improved Ties With South
Related: North Korea To Embark On Major Agricultural Reform: Report
Related: The Time To Re-Engage North Korea Is Now: Dan Steinbock
However, any planned economic reforms in the isolated state have been overshadowed in the international media by North Korea’s missile and nuclear threats.
Kim has also stated this year that a nuclear arsenal remained the nation’s primary priority, even in their plans to establish an “economic giant.”
[quote]“Let us bring about a radical turn in the building of an economic giant with the same spirit and mettle as were displayed in conquering space,” he said in his New Year’s Day speech, referencing the country’s controversial satellite launch in December 2012.[/quote]
