Returning from China, North Korean workers are paid in dubious IOUs

North Korean workers returning from China with hopes of a big payday are incensed because the government is not paying them in cash. Instead, it’s giving them bank-issued money vouchers, which the workers are worried might end up being worthless, residents told Radio Free Asia.

The vouchers, essentially IOUs, were issued in 2021 in the middle of the COVID-19 pandemic. Authorities explained that they could be used just like cash, and that they would be phased out once the pandemic ended. 

Until then, the vouchers – printed on lower quality paper than the currency –  are supposed to be traded with cash on a 1:1 ratio, but nobody knows how long they will be good.

North Koreans are already distrustful of their government on money matters because in 2009 it revalued the won, issued new currency and limited the amount of older currency that could be traded for the newer one, wiping out the life savings of many. 

Since then, faith in the won has been shaky, so dollars, euros and yuan are therefore freely traded in North Korean marketplaces. Faith in the vouchers is even shakier than the won.

“Most of the workers feel like they have returned empty-handed, so they are angry,” a resident of the northwestern province of North Pyongan told RFA Korean on condition of anonymity for security reasons.

“Although the party emphasizes that the money vouchers should be used without restrictions like cash, people distrust them because the authorities clearly stated that they are a temporary measure due to the prolonged COVID-19 crisis,” she said.

Assumptions

When workers are sent overseas – mostly to China – there’s already an understanding that the lion’s share of their wages will be forwarded to the cash-strapped government in Pyongyang. 

The remainder, however, is several times more than what they would earn doing the same job in North Korea. 

So the Chinese companies get cheap labor, the government gets a lot of foreign cash, and the workers still come out ahead – or such was the assumption.

The workers, mostly young women working in factories, had been in China since before the pandemic, some for six years or more.

Because they were earning yuan in China the workers thought they would be paid in yuan upon their return.

But they are now told to accept payment in money vouchers, which the people have very little confidence in, the North Pyongan resident said.

Red tape and unfair exchange rates

On top of this, the government appears to be exploiting the workers further through red tape and unfair exchange rates, the sources said. 

“The market exchange rate is 1,700 to 1,800 won per Chinese yuan,” she said. “But the announced rate is fixed at 1,260 won per yuan, so the workers are getting screwed.”

The Chinese companies paid 2,500 yuan (about US$350) for each worker every month, but about two-thirds of this money was sent to the state. 

The workers were said to be earning about 800 yuan ($110) per month, but then red tape fees cut into even that amount.

“There’s management fees at headquarters, maintenance costs at the consular department, insurance costs, social subsidies, and accommodation fees,” the resident said. “When all is said and done the workers are said to be getting between 100 and 300 yuan (US$13-41) for the whole month.”

Remarkably, that is still above the paltry salaries for government-assigned jobs in North Korea.

Another North Pyongan resident said that the workers are getting a raw deal after putting in 14-hour days in China and now have to accept payment in money vouchers.

“The selection of workers dispatched overseas is still ongoing these days, but not many workers are willing to go to China,” she said. “The poor working environment and intensive labor exploitation in China, as well as the fact that the payment is not properly compensated, have become widely known facts.”

She said that some of the workers who returned this time gave up all of their wages and returned with nothing, after the authorities compelled them to donate to various funds and subsidies.

These include supporting national and local construction projects, condolence donations for the late former leaders Kim Il Sung and Kim Jong Il on their death anniversaries, and funds to strengthen national defense.

“They won’t see even a single yuan coin for all their hard work in China,” the first resident said.

 Translated by Claire S. Lee. Edited by Eugene Whong and Malcolm Foster.