Wages paid to N.K. workers go to food: businessman

Joint N.K.-overseas operation converts wages to necessities

North Korea sends 75 percent to 90 percent of the wages paid to its workers at the inter-Korean industrial complex in Gaeseong (Kaesong) to a company jointly run by Gaeseong city and Koreans overseas. The company buys basic necessities from foreign countries on behalf of the North Korean workers, such as food, said one of the company’s founders.

In addition, the company distributes the imported necessities to North Korean workers at some 10 distrubution centers in Gaeseong city, with the allotment of goods dependent on each worker’s wage level. This system challenges critics’ views that the wages for Gaeseong workers are lining the pockets of the North’s top politicians or the North Korean Workers’ Party members.

The details were revealed by the founder of the Gaesong-overseas joint company, 66-year-old Song Young-deung who operates Lobana trading Co. Pty. Ltd. in Australia. In a recent interview with The Hankyoreh, the Korean-born Australian said he set up the 51:49 joint company in Gaeseong, named Koryo Commercial Joint Operation, in January 2005.

So far, North Korea has been found to receive signatures from the Gaeseong complex workers after showing wage details to them. However, it was not previously known how North Korea delivers necessities to the workers, prompting some to speculate that a majority of the wages may be transferred to the North’s top politicians or the Workers’ Party.

Song said wages go to workers "in a different way." At first, North Korea’s agency in charge of the Gaeseong industrial complex receives wages from the South Korean companies housed in the Gaeseong complex. Then, the authority deposits 75 to 90 percent of the wages in a bank in Gaeseong. Koryo Commercial Joint Operation then remits the wages and imports some 120 basic necessities such as rice, sugar, and wheat flour. The imported necessities are distributed to the Gaeseong complex workers, Song said.

Song said the authority sends a list to each distribution center that shows the amount each worker is allowed to buy based on wage level. Workers receive necessities between the 10th and 20th of each month after showing their identification cards issued by the Gaeseong complex. The distributed necessities are priced under the North Korean won, but the workers’ real purchasing power is maintained because the prices are converted using the official foreign exchange rate of 140-150 North Korean won to $1, Song said.

Song was asked why North Korea has refused to directly pay wages to its workers at the Gaeseong complex. "In the case of top technicians in Gaeseong, they are paid 20,000 to 30,000 won in the North Korean currency and receive some goods. However, their actual purchasing power is cut by one-third when compared with that of the Gaeseong complex workers [due to unofficial exchange rates on the market]. Due to this disparity, North Korea is seen as reluctant to pay direct wages to the laborers."

In the meantime, South Korean authorities are believed to have confirmed as legitimate Song’s stores in Gaeseong and his joint business operation to buy necessities overseas on behalf of the North Korean laborers.

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