N. Korea’s expatriate labor needs ethical and financial limits

N. Korea increasingly relies on expat labor for hard currency

A series of new reports suggests that the export of labor has become a major source of income for Pyongyang. The Financial Times cites an NGO estimate that the regime earns $1.5 to $2.3 billion a year from contract labor, in line with educated estimates of its annual revenue from missile sales ($1.5 billion) or arms deals with Iran ($1.5 billion to $2 billion). (Update: Marcus Noland questions that estimate, and thinks the more likely figure is between $150 million and $200 million, which is still a lot of bling.) Ahn Myeong-Cheol, a former prison camp guard and leader of the NGO NK Watch, says that there are now 100,000 North Koreans working overseas, double the number it had posted overseas in 2012. Ahn believes North Korea is increasing its use of contract labor to compensate for arms revenue lost to U.N. Security Council sanctions. Marzuki Darusman gives the lower estimate of 20,000. In testimony appended to the end of this post, Greg Scarlatoiu of the Committee for Human Rights in North Korea puts the figure at around 53,000. He also offers this very specific breakdown:

Currently, 16 countries reportedly host workers sent by the North Korean regime: Russia (20,000), China (19,000), Mongolia (1,300), Kuwait 5,000), UAE (2,000), Qatar (1,800), Angola (1,000), Poland (400-500), Malaysia (300), Oman (300), Libya (300), Myanmar (200), Nigeria (200), Algeria (200), Equatorial Guinea (200) and Ethiopia (100).4 Although North Korea is not a member of the International Labor Organization (ILO), all but two of the 16 states officially hosting North Korean workers are ILO members.

Scarlatiou cites this study by the Asan Institute, which I haven’t read, as the source of these figures.* For years, North Korean workers have been sent to stitch BMW headrests in Europe; build political monuments in Africa (at costs that are suspiciously above market value); mine coal in Malaysia; and cut down trees in the 40-below cold of Siberia without proper winter clothing or safety equipment. Recently, Radio Free Asia reported that North Korean managers were deported for pimping out female textile workers in China. Needless to say, such working conditions fall far short of ILO standards.

Media scrutiny causes Qatar to fire N. Koreans over labor violations

Recently, Qatar became a target for criticism by human rights groups for using North Korean labor to build venues for the 2022 World Cup. Pressure on Qatar has led one construction company to fire 90 North Korean workers, or half of its North Korean work force, for “a series of violations and misconduct by the North Korean workers and their supervisors.” A North Korean company called Genco (not to be confused with that other shady front company of literary infamy) employs the workers.

“The Korean supervisors responsible for the wellbeing of their workers have been continuously forcing them to work more than 12 hours a day. The food provided to their workforce is below standards. Site health and safety procedures are ignored regularly,” said one representative of the company, according to the document. [VOA News]

UPI adds that at least one North Korean worker died due to violations of safety standards. A hundred other North Korean workers continue to work at the company’s construction projects in Qatar. The report did not make clear whether the projects were related to the World Cup. The FT found severe conditions at one Gulf State construction project, where North Korean managers forced their workers to keep toiling in the 120-degree heat, when foreign laborers from other Asian countries took shelter.

As a result of this scrutiny, North Korea has tried to impose information blockades around its expatriated workers. In April, Radio Free Asia reported that the regime has directed its workers to physically assault reporters who try to cover them, and smash their cameras. New Focus also reported that the regime had forbidden its workers in China, where dubbed South Korean dramas are broadcast regularly, from watching TV. Workers were previously “allowed some degree of freedom” if they moved in groups of two or three. Now, they’re forbidden from leaving the work area except in groups of 15 or more. Those who break the rules are sent back to North Korea. God only knows what happens to them (and their families) after that.

Workers receive little or none of their “wages”

Whether you define North Korea’s labor arrangements as slave labor may depend on how you define the term, and on the circumstances of each project. How much of their wages North Korean overseas laborers get to keep varies from project to project:

Current and former North Korean overseas workers describe how the vast majority of their nominal wage is lost to management fees and contributions to the ruling Korean Workers’ Party. Their testimonies suggest a common system where managers agree to send a set monthly sum back to North Korea. If funds are short, the workers may be denied their wages or made to contribute to the remittance.

Yet workers can still earn $1,000 for a year’s work — a significant sum in North Korea, where most rely on the black market for sustenance and where bribery can be a crucial means of obtaining professional or other opportunities, such as securing education for their children. “The bribes to get into a good university are expensive — Kim Il Sung University is about $10,000,” says one former overseas worker. [Financial Times]

In some cases, defectors reported that they were left with nothing after party contributions were deducted; their bosses told them to be thankful they got two meals a day. The FT’s sources reported that they received either a small percentage of their nominal wages, or in one case, most of a $4-a-month pittance. One said that the money was enough to buy a decent apartment at home. Another, quoted in The Chosun Ilbo, said he was allowed to keep $100 out of a nominal salary of $750. The fact that North Korean workers in Muslim countries are regularly caught bootlegging alcohol suggests that their take-home earnings are insufficient to feed themselves, and their families. At Kaesong, arguably the most-scrutinized of all these arrangements, it still isn’t clear whether the workers receive any cash wages at all.

Defenders of these labor-export arrangements argue that the North Korean workers there earn more and live better than those who remain behind, but the same justification might also be true of a child prostitute in Cambodia, or other human trafficking victims of any number of nationalities and circumstances. It still doesn’t justify exploitative and dangerous working conditions, which are harmful to the North Korean workers, to workers in the host countries, and ultimately, to those imprisoned inside North Korea by a system perpetuated by exploitation.

Toward a More Ethical Model of Engagement

There are two possible approaches to this problem. One approach is suggested by the conduct of the Qatari firm that fired half its North Korean work force, and warned that the rest would be fired if they failed to comply with labor standards. In this 2014 paper, Marcus Noland argued that Kaesong and other consumers of North Korean labor should agree to a code of ethics, akin to the Sullivan Principles, which were used to pressure South Africa to treat its African work force more fairly. But as Noland notes, the adoption of the Sullivan principles “did not occur in isolation;” companies adopted them under the threat of boycotts, divestment campaigns, shareholder resolutions, and eventually, U.S. sanctions laws. Users of North Korean labor must also comply with the financial transparency requirements of U.N. Security Council Resolution 2094, which prohibits the provision to North Korea of economic resources that could be used for prohibited weapons programs.

If users of North Korean labor agreed on a similar code of conduct, there would be far fewer objections to these arrangements, and the balance of equities in this debate might shift. That code would have to include basic worker safety protections, and guarantees that the workers would receive, spend, and repatriate a living wage. The regime could receive the remaining proceeds to purchase food, medicine, and other humanitarian needs and services in kind.

Because moral suasion doesn’t work on everyone, standards that conflict with profit motives need hammers. In the case of South Africa, the hammers included the fear of reputational harm, and eventually, sanctions. Under Section 104(a)(1)(F) of the North Korea Sanctions Enforcement Act, those who engage in transactions in forced labor or human trafficking would be subject to the blocking of their assets in the dollar-based financial system.

Greg Scarlatoiu’s testimony here: Testimony of Greg Scarlatoiu Final

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* This is my cue to unburden my soul of something. Some months ago, I bruised an Asan scholar and OFK reader by writing (on reflection, unjustly) that Asan “largely” (then changed to “sometimes”) “reflects the views of, and serves the interests of, the South Korean government.” I’ll keep the original basis for that conclusion to myself, but Asan’s work since then has convinced me that it simply isn’t true. I don’t think there’s any question that Asan is the foremost Korean think tank publishing work on North Korea today. I apologize for the slight.