North Korea: Workers' Rights at the Kaesong Industrial Complex

I. Introduction

The Democratic People's Republic of Korea (DPRK, North Korea) opened the Kaesong Industrial Complex (KIC) in June 2004 under a contract with Hyundai Asan Corporation and state-owned Korea Land Corporation of the Republic of Korea (ROK, South Korea). The complex is located between the city of Kaesong and the western end of the border between the two Koreas, an hour's car ride from Seoul. As of August 2006, 13 South Korean companies had opened facilities at the KIC, employing about 8,200 northern workers to produce watches, shoes, clothes, kitchenware, plastic containers, electrical cords and car parts, among other items. Ten other companies are preparing to start operations in the near future. North and South Korea have an ambitious plan to expand the complex to employ 730,000 North Korean workers by 2012.¹ A specific KIC Labor Law was drafted and adopted to govern the rights of workers employed by enterprises in the KIC.

It is generally accepted that North Korea prohibits organized political opposition or independent civil society. The country has an abysmal human rights record, including arbitrary arrests, pervasive use of torture, lack of due process and fair trials, and executions. There is no freedom of information or freedom of religion. There are no independent trade unions or labor activism. Most North Koreans do not enjoy the freedom to choose their own occupation, because job assignments follow the state's central economic plan, rather than individual talents or wishes.²

Working conditions at the KIC have been a subject of debate. Jay Lefkowitz, the United States special envoy on human rights in North Korea, has raised concerns about possible worker exploitation at the KIC, particularly the low salaries and their indirect payment.³ South Korea's Ministry of Unification (in charge of North Korea relations, including joint projects such as the KIC) responded by saying that the North Korean workers at the KIC are paid better than elsewhere in the country and that their labor conditions meet international standards. The Ministry also noted that South Korea is "making technical preparations for direct payment for northern workers," as required under the inter-Korean agreement on the KIC.⁴

This briefing paper provides an overview of the work conditions at the KIC and notes ways in which workers' rights are being compromised. In July 2006, Human Rights Watch sent a list of questions to the Ministry of Unification about the KIC (see Appendix). The ministry sent a written response, which Human Rights Watch followed up with phone and in-person interviews with ministry officials. Separately, Human Rights Watch interviewed a representative of South Korean employers at the KIC. This paper is based on their responses and Human Rights Watch's analysis, interviews with Seoul-based experts on North Korea's labor laws and with people who have visited the KIC in an official or private capacity, reviews of the KIC Labor Law, and books and reports written by independent scholars with expertise on North Korea.

Human Rights Watch believes that the KIC is a small step forward, in that it opens a window onto and from an otherwise hermetically sealed nation, one that consistently denies access to international human rights organizations. But for the KIC to represent real progress in North Korea's human rights conditions, basic workers' rights must be protected and promoted. Although the KIC Labor Law addresses certain workers' rights, many of the most fundamental rights are missing, including the right to freedom of association and collective bargaining, the right to strike, the prohibition on sex discrimination and sexual harassment, and the ban on harmful child labor. Absent legal protections requiring that these rights be respected, Human Rights Watch is concerned that they may be violated with impunity.

As a first step towards addressing inadequate workers' rights protections at the KIC, Human Rights Watch urges North Korea to:

• Join the International Labour Organisation (ILO);
• Accede to the ILO's core treaties;
• Invite ILO officials to discuss the protection and promotion of workers' rights; and
• Amend the KIC Labor Law to meet international labor standards, and ensure the law is effectively enforced.

Human Rights Watch also urges South Korea to:

• Ensure South Korean companies operating at the KIC are respecting workers' rights; and
• Promote the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises.

II. Background

North Korea's laws, including its labor laws, are based on the country's state ideology of "juche," or self-reliance, socialism, communism and the policies of the Workers' Party. Guiding principles or instructions by former President Kim Il Sung have legal force that supersedes the constitution or laws. North Korea's labor laws are composed of the Socialist Labor Law and relevant provisions in the constitution and the penal code, in addition to laws concerning foreign investors and businesses.⁵ The state has full control over the labor market, and the law permits only labor organizations sanctioned and controlled by the state. Under North Korean law there is no concept of an employment contract, as workers are assigned to their jobs by state labor administrative agencies under the control of the Workers' Party.⁶ The state is responsible for providing basic services such as food,⁷ healthcare, education and housing, and in return for their labor workers are paid a small amount of remuneration in cash or coupons to cover items such as supplementary food, clothes, or furniture.

The KIC Labor Law was drafted by the North Korean government after consulting with Hyundai Asan Corporation and was then adopted by the Standing Committee of the (North Korean) Supreme People's Assembly.⁸ It has not been publicly disclosed whether the North Korean government consulted with workers in drafting the law. The KIC Management Committee, a North Korean organization with technical staff from South Korea,is in charge of operational support at the KIC, including enforcing the KIC law, monitoring compliance, and punishing violators, under the supervision of North Korea's Central Special District General Bureau for Kaesong Industrial Complex (the General Bureau).⁹ According to the South Korean Ministry of Unification, North Korea's labor laws apply to employment conditions in the KIC in the event that the KIC Labor Law is silent on a particular matter.¹⁰

North Korea is a party to four main international human rights treaties: the International Covenant on Civil and Political Rights (ICCPR),¹¹ the International Covenant on Economic, Social and Cultural Rights (ICESCR),¹² the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW),¹³ and the Convention on the Rights of the Child (CRC).¹⁴ All provide important workers' rights protections. As a party to these international human rights treaties, North Korea has a legal obligation to protect these rights. Both the ICCPR and ICESCR establish workers' right to freedom of association (which includes the right of collective bargaining),¹⁵ and ban discrimination against people based on their race, color, sex, language, religion or social origin.¹⁶ Furthermore, the CEDAW directly bans employment and workplace sex discrimination and violence against women, including sexual harassment.¹⁷ The ICESCR and the CRC prohibit dangerous or hazardous work for children under the age of 18.¹⁸

The ILO conventions form the core of international standards on workers' rights, but North Korea is not a member of the ILO.

Although Kaesong is North Korean territory, South Korea also has a responsibility as a member of the OECD to ensure that South Korean corporations respect international labor standards as laid out in the OECD Guidelines for Multinational Enterprises.¹⁹ South Korea is among the 39 countries that have pledged to adhere to the guidelines, which state that enterprises should "respect the human rights of those affected by their activities consistent with the host government's international obligations and commitments," "respect the right of their employees to be represented by trade unions and other bona fide representatives of employees," "contribute to the effective abolition of child labor," and "not discriminate against their employees with respect to employment or occupation on such grounds as race, colour, sex, religion, political opinion, national extraction or social origin." The guidelines also state that enterprises should provide facilities and information to employees that may be needed for the negotiation of meaningful and effective collective agreements and enable authorized representatives of their employees to bargain collectively.²⁰ The guidelines establish state responsibilities, asserting that "governments wish to encourage the widest possible observance of the Guidelines," and that "adhering to the Guidelines will promote them and encourage their use."²¹

III. The Labor Conditions Framework at the KIC

The questions Human Rights Watch sent to the Ministry of Unification sought specific information on labor conditions at the KIC and included questions on freedom of association and collective bargaining, sex discrimination, sexual harassment, child labor, hours of work, wages, healthcare, monitoring of labor conditions, safety inspections, enforcement of the KIC Labor Law and measures to address violations, labor-management disputes, and workers' awareness of their rights. The Ministry of Unification answered most of the questions, though in many cases did not include as much detailed information as requested. Human Rights Watch could not independently confirm the Ministry's answers – with the exception of those addressing published legal provisions – as it has not yet been given access to KIC workers to corroborate the responses provided.

1. Wages

The KIC Labor Law stipulates that North Korean workers must be paid a minimum of U.S.$50 per month. Their hourly rate is $0.25. North Korean workers at the KIC reportedly worked an average of 54.9 hours per week and received an average of $67.40 per month in 2005.²² North Korea takes 30 percent of the workers' wages as a contribution to a fund designed to provide free housing, healthcare and education. The Ministry of Unification told Human Rights Watch that South Korean companies ensure that their KIC workers are aware of how much they are supposed to be paid by having the workers sign payroll forms that show their work hours and wages.

Article 32 of the KIC Labor Law stipulates that South Korean companies shall pay wages to North Korean workers directly in cash. However, on North Korea's demand, South Korean companies remit worker salaries to the North Korean government, which in 2005 reportedly paid the workers an average of 6,300 North Korean won per month,²³ or $42 using the official exchange rate of 150 North Korean won for one U.S. dollar.²⁴

2. Hours of Work

The Ministry of Unification told Human Rights Watch that North Korean workers at the KIC work eight hours per day and 48 hours per week, not including overtime. The average overtime for KIC workers in 2005 was reportedly 6.9 hours per week. The KIC Labor Law does not establish the maximum work hours per week, but it stipulates that South Korean companies shall consult with workers' representatives prior to requesting workers to work overtime, and workers can refuse. North Korea's Labor Law, meanwhile, states that workers shall maintain a routine of eight hours of work, eight hours of study and eight hours of rest.²⁵

Article 22 of the KIC Labor Law stipulates that employers shall guarantee workers North Korea's national holidays, off days and rest time.²⁶ KIC workers are thus guaranteed one day off per week. In addition, the KIC Labor Law provides that all workers shall be given 14 days of paid leave per year, while those in dangerous or hazardous occupations shall be given an additional two to seven days of paid leave. Including national holidays, North Korean workers in non-hazardous jobs, therefore, take 71 days in national holidays and off days per year for which they are paid plus 14 days of paid leave.²⁷

3. Healthcare and Industrial Accidents

Under the KIC Labor Law, North Korea is in charge of healthcare for its workers. According to the Ministry of Unification, because North Korea does not have adequate healthcare services, the KIC Management Committee makes significant efforts to prevent industrial accidents. The KIC Labor Law stipulates that in case of death, injury or poisoning of North Korean workers while at work, South Korean companies shall immediately notify the KIC Management Committee, which shall handle the incident in consultation with the General Bureau. Once an injury occurs, the North Korean government reportedly covers the treatment of the injured from a social welfare fund it raises from South Korean companies (equivalent to 15 percent of worker salaries) and North Korean workers (30 percent of their salaries – see above). The KIC Labor Law does not provide for workers' compensation, however, and it is not clear whether North Korean workers receive monetary compensation for injuries or salaries during a sick leave.

The number and rate of industrial accidents at the KIC are not publicly disclosed, though South Korean companies investing in the KIC are reportedly discussing with the North Korean government the possibility of publicizing such information.

4. Labor-Management Disputes

The KIC Labor Law stipulates that labor-management disputes shall be resolved through consultation between the workers and employers, though it fails to clarify whether the requirement bars workers from exercising their right to strike. Under the KIC Labor Law, if a matter cannot be resolved through consultations, workers and employers can ask the KIC Management Committee to mediate. According to the Ministry of Unification, if the KIC Management Committee is unable to resolve a dispute to the satisfaction of both parties, either party can lodge a complaint with the General Bureau, although there is no such provision in the KIC Labor Law. The KIC Labor Law provides, however, that in cases in which an employer or employee has an "opinion" regarding a penalty imposed against the employer or employee, either can raise the issue with the Management Committee or the General Bureau, which must resolve the issue of concern within 30 days after the complaint is filed.

Although there is no law that bans retribution against workers for requesting mediation, the Ministry of Unification told Human Rights Watch that such retribution is impossible because the KIC Management Committee and the General Bureau monitor working conditions constantly.

5. Monitoring of Labor Conditions

According to the Ministry of Unification, the KIC Management Committee makes daily trips to work sites without advance notice to monitor the labor environment and compliance with the KIC Labor Law. When North Korean workers have concerns about labor conditions, they can raise them with either the KIC Management Committee or the General Bureau. Similarly, South Korean companies operating at the KIC can raise issues regarding North Korean workers with the KIC Management Committee as well. In such cases, the General Bureau and Management Committee visit the work site, with advance notice to employers and workers, and later share the results of their monitoring visit with the South Korean company of concern. Their findings are not made public. The Ministry of Unification did not say whether they share the findings with the workers.

6. Safety Inspections

According to the Ministry of Unification, the KIC Management Committee submits requests for safety inspections at KIC facilities to the Ministry of Unification, which then forwards the requests to South Korea's Labor Ministry and the (South) Korea Occupational Safety and Health Agency (KOSHA). The agency conducts safety inspections and submits the results to South Korean companies, the Management Committee, and the Unification and Labor Ministries. The committee accordingly makes recommendations to the southern employer to remedy any violations of the KIC Labor Law that are found. Additional KOSHA staff are based at the KIC and work with the Management Committee. KOSHA inspectors conducted two inspections in 2005 and another this year (as of August 2006), with a plan to conduct one more before the end of the year.

7. Violations of the KIC Labor Law

According to the Ministry of Unification, if violations of the KIC Labor Law are found after monitoring, the KIC Management Committee will make recommendations to South Korean companies to remedy the violations. If the conditions do not improve, the committee can impose a fine (from $100 to $2,000) or order the company to stop operations. So far, none of the South Korean companies has been fined, as the KIC Management Committee has found no violations of the law.

It should be noted that despite the law's stipulation that North Korean workers be paid directly in cash, South Korean companies are clearly violating this by instead paying workers' wages to the North Korean government, although they claim that the latter has forced them to do so. At a minimum, this reflects the limitations of the KIC Management Committee in being able to ensure that the KIC Labor law is effectively enforced.

8. Workers' Awareness of Rights

According to the Ministry of Unification, South Korean companies operating at the KIC do not provide workers with written information on their rights. The ministry told Human Rights Watch, however, that North Korean workers are well aware of the important parts of the KIC Labor Law, including work hours, wages and bonuses.

1 Kaesong Industrial Complex homepage, http://gaeseong.iklc.co.kr/index.htm (accessed July 25, 2006).

2 Korea Institute for National Unification, "White Paper on Human Rights in North Korea," March 2006, pp. 177-184.

3 Jay Lefkowitz, "Freedom for all Koreans," The Wall Street Journal, April 28, 2006.

4 Ihn Kyo-joon, "South Korean Official Tells U.S. Human Rights Envoy Not to Interfere with Domestic Affairs," Yonhap News Agency, April 30, 2006.

5 Moon Moo-gi, Assessing Outlook of North Korea's Labor Law Changes through Analysis of Chinese Legal Changes (Seoul: Korea Labor Institute, 2002) pp. 165-170.

6 Article 33 of the North Korean Labor Law reads, "The state shall strictly enforce the principle of eight hours of labor, eight hours of rest and eight hours of study in workers' daily labor structure. The authorities, management and social collectives should regularize workers' labor, normalize their study and guarantee their rest by properly combining labor, rest and study." Chongko Choi, North Korean Laws, (Seoul: Pakyoungsa Publishing Co., 2001) p. 364.

7 In reality, most North Koreans are forced to find food on their own, as the state food distribution system broke down during the food crisis in the 1990s. Despite improvements in overall food production and foreign aid in recent years, many North Koreans still suffer from hunger. See Human Rights Watch, A Matter of Survival: The North Korean Government's Control of Food and Risk of Hunger, vol. 18, no. 3(C), May 2006, http://hrw.org/reports/2006/northkorea0506/.

8 The Supreme People's Assembly is the legislative branch of the North Korean government. The Standing Committeehas the legal authority to review and adopt laws, abolish laws, and offer official interpretation of laws, among other duties. Chung Suk-hong, Comparative Study of North and South Korea, (Seoul: People&People Publishing Co., 1999) pp. 92-97.

9 The KIC Management Committee is made up of about 50 South Korean civilian experts on law, health, industrial safety, accounting, and similar issues. A few North Korean officials also work for the Management Committee, but Human Rights Watch has not been able to ascertain how they are selected. Some 80 other North Koreans, including cleaners, bus drivers and photographers also work for the committee. Human Rights Watch telephone interview with a Ministry of Unification official, Seoul, August 23, 2006.

10 Human Rights Watch interview with a Ministry of Unification official, Seoul, August 2006.

11 International Covenant on Civil and Political Rights (ICCPR), adopted December 16, 1966, G.A. res. 2200A (XXI), 21 U.N. GAOR Supp. (No. 16) at 52, U.N. Doc. A/6316 (1966), 999 U.N.T.S. 171, entered into force March, 23, 1976, acceded to by the DPRK on April 10, 1990.

12 International Covenant on Economic, Social and Cultural Rights (ICESCR), adopted December 16, 1966, G.A. res. 2200A (XXI), 21 U.N.GAOR Supp. (No. 16) at 49, U.N. Doc. A/6316 (1966), 993 U.N.T.S. 3, entered into force January 3, 1976, acceded to by the DPRK on April 10, 1990.

13 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), adopted December 18, 1979, G.A. res. 34/180, 34 U.N. GAOR Supp. (No. 46) at 193, U.N. Doc. A/34/46, entered into force September 3, 1981, ratified by the DPRK on December 27, 1984.

14 Convention on the Rights of the Child (CRC), adopted November 20, 1989, G.A. res. 44/25, annex, 44 U.N. GAOR Supp. (No. 49) at 167, U.N. Doc. A/44/49 (1989), entered into force September 2, 1990, ratified by the DPRK on November 20, 1991.

15 ICCPR art. 22 and ICESCR art. 8.

16 Art. 2 of both the ICCPR and ICESCR.

17 See in particular CEDAW arts. 2, 5 and 11, and General Recommendation No. 19, adopted at the CEDAW Committee's 11th Session, 1992, www.un.org/womenwatch/daw/cedaw/recommendations/recomm.htm#recom19.

18 ICESCR art. 10 and CRC art. 32.

19 The OECD Guidelines for Multinational Enterprises are recommendations to international business for conduct in such areas as labor, environment, consumer protection and the fight against corruption. The recommendations are made by the adhering governments and, although they are not binding, governments are committed to promoting their observance. Revised OECD Guidelines for Multinational Enterprises were adopted on the occasion of the OECD's annual Council meeting at ministerial level in Paris on June 27, 2000. The full text can be found at http://www.oecd.org/dataoecd/56/36/1922428.pdf. The OECD Annual Report on the Guidelines for Multinational Enterprises: 2005 Edition (Paris: OECD, 2005), can be found at http://www.oecd.org/document/45/0,2340,en_33873108_33873555_35845165_1_1_1_1,00.html.

20 OECD Guidelines for Multinational Enterprises, pp. 21-22.

21 Ibid., p. 18.

22 KIC Council of Industry Representatives, "Worker Wage and Labor Conditions at Kaesong Industrial Complex," May 2006, pp. 19-20.

23 Ibid.

24 In a black market rate, one U.S. dollar is worth about 3,000 North Korean won, or 20 times the official rate. Kwak Dae-jung, "Exchange Rate Stands at Average 3,000 Won in March," The Daily NK, March 22, 2006.

25 North Korean Labor Law, art. 33.

26 KIC Labor Law, art. 22.

27 The Korea Institute for National Unification says in a report that, in reality, North Korean workers generally do not get eight hours of daily rest as they are forced to take part in various political studies, meetings, etc. after work hours. Korea Institute for National Unification, "White Paper on Human Rights in North Korea," pp. 177-184.