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Few analysts would deny that Kim Jong-un's rule has been marked by continued economic growth. The exact growth rate is uncertain, but it is clear that North Korea, while still very poor, is becoming less and less economically impoverished and desperate.
Much of this growth is driven by the unacknowledged but powerful revival of the market economy in North Korea over the last 15 years. As everybody knows, a market economy brings economic growth, but if unchecked by the state, it also brings remarkable levels of material inequality.
One should not be surprised that North Korea is becoming both more affluent (or should we say, less destitute?) and more unequal. People involved in the black or grey private economy often run large-scale operations such as bus companies, fishing and even mining. They are getting richer.
This does not mean that commoners are getting poorer. By all accounts, the income of less successful North Koreans is growing, too. But the gap between the rich and poor is large and widening.
Since pretty much all market income is unofficial and not reflected in statistics, one has to largely rely on anecdotal evidence when estimating the levels of social differentiation in Kim Jong-un's North Korea. One cannot, for example, measure the Gini coefficient. Nonetheless, some foreign observers based in Pyongyang and other large North Korean cities have privately told me that North Korea today looks like a country where the Gini coefficient must be close to 0.50, i.e. significantly higher than, say, the United States. This is remarkable because merely 20 years ago, when state socialism was still alive, North Korea was a very equal society in which only a few high-level officials had incomes much higher than the average person _ even they would probably only have had a lifestyle roughly equivalent to the Western middle class at best.
What is the current level of income in Pyongyang and other major cities? Official salaries are no guide here, since they are equivalent to significantly less than $1 and play very marginal roles in the income of most North Korean families. What's far more important is the income that families get from participating in the private economy. That said, in some cases, enterprises also pay bonuses, legal, semi-legal, or illegal, that greatly exceed base salaries. Finally, some North Korean families are paid in kind, receiving food and consumption goods at highly subsidized prices.
Taking such considerations into account, it appears that the household income of a family of two adults in Pyongyang is around $60-80 per month. In the countryside, incomes are far less impressive: perhaps close to half of what people in Pyongyang make on average.
It is easier to talk about the income of the new rich. A small-time entrepreneur who owns say a small canteen or a semi-legal workshop producing counterfeit tobacco is likely to make a few hundred dollars a month. Such people constitute a majority of North Korea's new entrepreneurial class.
There are rich people too. This year, I have used some opportunities to ask North Koreans about the line that distinguishes the merely affluent from the rich. Predictably, they cite different figures, but usually tens of thousands of dollars is where the line appears, and in Pyongyang the line might be close to $100,000. Of course, what they are talking about is operating capital, the person's net worth (perhaps excluding the market price of their property), and not their disposable income.
The skyrocketing price of real estate in Pyongyang and other major cities is also a clear indication of both economic growth and income stratification. High-end property, the North Korean equivalent to a penthouse suit in downtown Manhattan, will sell for around $200,000, while merely a good apartment would cost $100,000 or less. Prices in the countryside are significantly lower, but even in Sinuiju, one has to part with some 50,000 greenbacks to purchase a large apartment in a new complex.
Of course, real estate is so popular because it is one of only a few safe investments available to the North Korean new rich. They can also spend their money in other ways: on eating out (there is a restaurant boom in Pyongyang) and buying consumer durables, even cars, as well as on mistresses. Indeed, like China, conspicuous concubinage seems to be quite common among the new rich.
Professor Andrei Lankov was born in St. Petersburg, Russia, and teaches at Kookmin University in Seoul. You can reach him at anlankov@yahoo.com.
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