Located just across the demilitarized zone in North Korea, the Kaesŏng Industrial Complex (KIC) is an industrial area where South Korean companies use North and South Korean labor to manufacture products. A joint project formed in 2004 between North and South Korea, the KIC is seen as landmark progress in North-South relations and a symbol of the growing level of engagement between the two countries. As of June 2009, about forty thousand North Korean and one thousand South Korean workers were employed in the KIC. KIC workers perform unskilled and semi-skilled factory labor to produce watches, shoes, clothes, kitchenware, plastic containers, electrical cords, and car parts. Recently, South Korean journalists, international scholars, government officials, and non-governmental organizations have raised concerns about working conditions and exploitation at the KIC.

Officially, the minimum wage for North Korean workers at the KIC is U.S. $52.50 per month. However, North Korean government authorities retain the majority of worker salaries, and only a small amount actually reaches employees’ pockets. Article 32 of the KIC Labor Law requires that South Korean companies disburse wages directly to North Korean workers in cash. In practice, these funds are paid to a governmental agency in U.S. dollars at the request of the North Korean government, which maintains that wages are not directly paid to workers because there are not enough foreign exchange centers in the KIC. Human Rights Watch suggests that as much as 30 percent of wages owed to workers at the KIC are retained as contributions to a fund designed to provide free housing, healthcare, and education to the North Korean public. Others go even further to argue that the workers in the KIC receive about U.S. $2 per month, which means the North Korean government absorbs about 96.7 percent of KIC employee wages. Although the KIC Labor Law guarantees employees at the KIC full compensation for their labor, the exact amount the workers receive remains unclear.

In addition, other fundamental workers’ rights are not covered by the KIC Labor Law. The North Korean Central Guidance Agency on Special Zone Development, a cabinet level administrative body, recruits KIC workers and selects worker representatives, which are then approved by the South Korean companies operating there. This recruiting process allows the North Korean government to maintain a stable workforce and to control labor costs, and does not permit the companies themselves to bid for skilled workers. This practice interferes with the workers’ ability to elect their own representatives to act on their behalf. Moreover, it is a clear violation of internationally accepted workers’ rights to freedom of association and collective bargaining, which are protected by international treaties to which North and South Korea are States Parties. North Korea and South Korea are States Parties to four main international human rights treaties: the International Covenant on Civil and Political Rights; the International Covenant on Economic, Social and Cultural Rights; the Convention on the Elimination of All Forms of Discrimination against Women; and the Convention on the Rights of the Child. Each of these agreements enumerates important workers’ rights, which as States Parties, North and South Korea have a legal obligation to observe and protect.

To fulfill its legal obligations to workers within its borders, the North Korean government should work with the International Labor Organization to reexamine and revise the KIC Labor Law. The KIC Labor Law should be amended to include workers’ rights of freedom of association; to choose their employment according to their wishes, free from governmental interference; and to be fully informed of their rights. Furthermore, South Korean corporations should perform their duties as employers to respect international labor standards and to enforce the KIC Labor Law effectively. The revised law should impose sanctions on employers in cases where violations occur. The continued success of economic collaboration between North and South Korea depends on adequate and effective legal protections of workers in the KIC.