When we talk about any particular society, we tend to pay attention to the average income of its people. How much does a skilled worker make? And what about a high-ranking official? A junior military officer?

Such questions are important, to be sure, but North Korea is a country where such simple questions are nearly impossible to answer with any precision.

The North Korean system of official salaries is a complete mess, and always has been. Admittedly things have become somewhat clearer in the last decade or so, but even now formal income (official and unofficial) does not really indicate the person’s position in society with any degree of accuracy.

PERSONAL PROBLEMS

The most obvious, but least serious problem one encounters when approaching this question is the near complete absence of statistics. The North Korean government stopped publishing meaningful statistics some 60 years ago. Additionally, it appears that wages are considered an unmentionable topic in North Korea’s official publications, including fiction. Even when the media talks about the material affluence allegedly enjoyed by successful workers, such vulgar topics as wages and prices are seemingly never mentioned.

“120 won (a rather high salary in North Korea in the 1980s) would buy much more when paid to a party official than to an engineer or college lecturer”

However, far greater problems are created by the existence of the state distribution system. For a few decades between the late 1950s and early 1990s, one’s official salary was not all that meaningful. A North Korean could have a lot of money, but most items could only be bought if one had the requisite rationing coupon. Therefore, money was almost useless. Of course, one could rely on the black market to acquire coveted items, paying many times the official price in the process. However, in practice this meant that a person with privileged access to rationed items effectively had much more purchasing power than another person with the same formal income but no such access.

Therefore, 120 won (a rather high salary in North Korea in the 1980s) would buy much more when paid to a party official than to an engineer or college lecturer.

Things are further complicated by the official price structure. Food and other essential items, largely or completely distributed (and rationed) by the state, were usually heavily subsided to the point of being almost free.

PUBLIC DISTRIBUTION SYSTEM

In the Kim Il Sung era, from around 1960 to 1990, the North Korean state provided the entire population with set packages of food and other basic necessities. The size and composition of this package varied greatly depending on the place, time and above all, the social standing of the recipient. Essentially, the state determined the consumption behavior of the individuals. However, the formal price of this package remained almost symbolic, constituting a tiny fraction of the one’s income.

“The formal price of this package remained almost symbolic, constituting a tiny fraction of the one’s income”

For example, in the 1980s, every month a mid-ranking party official would be issued some 20 kg of pure white rice, about 4 kg of pork and 5 kg of fish, a few kilograms of cooking oil, 15 eggs, not to mention quality clothes, socks, pants and, on special occasions, even a TV set or wrist watch. All of this would cost the official some 15-20 won – a small part of his salary.

On the other hand, a semi-skilled worker in the same area would probably get 20 kg of corn, no meat, but perhaps some fish, no eggs, a bit of cabbage, as well as cheap clothes and plastic shoes. Nonetheless, the monthly cost would be about the same.

It makes sense, however, to discuss the salary system of the 1970s and 1980s – the period of North Korean history that can be described as “high Kim Il Sungism.” In those days, unskilled workers and farmers would normally be paid some 50 won a month. Technicians and skilled workers could count on getting 70-80 won, while engineers and managers’ salaries usually exceeded 100 won a month.

This system collapsed in the early 1990s. State industry came to a halt. In most cases, nominal wages were still paid, but the paralysis of the distribution made salaries into worthless paper. Indeed, around 2000, a kilo of rice would cost about 40 won. This meant that the average monthly salary would suffice to buy 2 kg of rice – and nothing else.

Therefore, the privileged few continued to receive rations, but even they saw their rations cut. The majority got nothing or very little. This meant that people had to rely on their own initiative to make the money to survive in the emerging unofficial market economy.

MARKET MONETIZATION

Through the decades of crisis, the North Korean government tried at least twice to make official wages socially relevant again. One attempt took place in 2002 when wages were raised significantly, but official state prices were also increased to a level roughly equal to then market prices. This reform led to a massive influx of cash into the market and inevitably triggered massive inflation – all too predictably official wages quickly became meaningless once again. The 2009 currency reform, while designed in a completely different way, produced very similar results.

Therefore, when we talk about the income structure of North Korea today we must roughly distinguish between two groups. There is a lucky minority with access to food rations, including officials, military and police personnel, but also workers in military industry, as well as some other key areas of the state-run economy and the population of major urban centers. The official monthly salaries of these people now are in the 1,500-7,000 won range, with 3,000 won seemingly being the average level (in the current exchange rate 3,000 won is equivalent to $0.5) However, rations are still heavily subsidized, hence these people still get food and some other basic necessities through the distribution system, and have little trouble paying for these items.

“These  people have to rely on their own strength, luck and connections to make a living”

Another much larger group (perhaps two-thirds of the entire working population) have little or no access to state distribution. These people have to rely on their own strength, luck and connections to make a living. Most of them either toil unofficial private plots, or do numerous jobs connected to the unofficial market economy. They might be employed in illegal workshops, where they produce shoes and garments. They might run their own food stalls, or repair shops. They might also be engaged in other forms of small-scale retail trade. For these people, official salaries are largely or completely irrelevant.

How much do these people make through unofficial economic activities? No precise statistics exist, but it appears that, at the time of writing, the average income in North Korea is around the $25-30 per month mark. People who run their own businesses are obviously making much larger sums. The evidence is necessarily anecdotal, but it appears that the owner of a small-to-medium sized restaurant would normally make $200-400 a month. The same goes for a person running an unofficial workshop making copies of fashionable Chinese garments.

There are also much richer people, whose monthly income can be counted in the thousands of dollars. Such people are as few as millionaires in developed countries (maybe even rarer).

The above-mentioned is necessarily a simplification. Many who have access to full rations still augment their income through the unofficial economy. One’s individual standing also can change with time. Nonetheless, it is fair to say that in North Korea of today, the average monthly income of a worker is somewhere between $30-40, while official salaries are much smaller, equivalent to $1 at best. The difference might be made up for through heavily subsidized state rations, but much more often is made up for through working in the unofficial economy.

Picture: Eric Lafforgue

When we talk about any particular society, we tend to pay attention to the average income of its people. How much does a skilled worker make? And what about a high-ranking official? A junior military officer? Such questions are important, to be sure, but North Korea is a country where such simple questions are nearly