SEOUL (dpa) – Observers of North Korea have noticed price increases and wage reforms, which may indicate the first steps in the adoption of a free market economic system.
The price of staples such as rice have risen a number of times since early July and the food rationing system is being phased out gradually.A graduated wage system has also been introduced. Together with the increased cost of living, this is expected to encourage workers to work harder and increase production.The authoritarian communist government of the country of 22 million may be hoping that market reform will end years of poverty and economic stagnation.The North Korean government has made no official pronouncement on the reforms and news of them has been coming from intelligence reports, diplomats and international aid organisations.The reports have been received with scepticism in South Korea, where the price increases have been interpreted as the emergence of a black market economy in North Korea, rather than an as implementation of long-term reforms.The exact nature of the reforms remains unclear.Speaking to the South Korean press, David Morton of the World Food Programme (WFP) in the North Korean capital Pyongyang, said the rationing system had not been abolished, but that prices had increased nevertheless.“Since July 1, food prices in the official markets have risen to those in the farmers market,” Morton told the Korea Herald.According to WFP, the food-supply situation in North Korea is still critical. The daily rice ration have been decreased from 350 grams of rice per person to 300 grams.The changes in North Korea come as no surprise to many experts.According to the Japanese-based pro-North Korean newspaper Choson Sindbo, the price of a kilo of rice has risen from one North Korean won to 44 won.The average monthly income is between 150 and 200 won. Although the official exchange rate is just over two won to the U.S. dollar, you can get 200 won for one dollar on the black market.Many observers doubt that economic reform will lead to internal political reform or to an expansion of civil liberties.North Korea is believed to be following the Chinese reform model, whereby economic liberalisation will take place within an authoritarian political structure.“North Korea has followed events in China very closely,” said Yoon Deok Ryong of the National Institute for International Economic Policy in Seoul.The current reform programme is focused on prices. But Yoon predicts that the liberalisation of the market will soon follow. He believes that people have to get used to dealing with free market prices before there is any further market liberalisation.
