◆Urbanites’ Declining Purchasing Power... Severe Sales Slump
Meanwhile, what about provincially-managed enterprises (factories)? As mentioned earlier, the Kim Jong-un regime introduced the "enterprise responsibility management system," granting enterprises management discretion while making them responsible for results. The system was designed so that enterprises would secure their own funds to purchase raw materials, produce and sell goods, use profits to pay workers' wages, and even provide food rations.
However, a reporting partner describes the current situation as follows:
"The government provides funding to provincial (managed) factories, with support from the trade bureau and city and county party offices, claiming it is to carry out the Supreme Leader's directives. But no matter how good the products are, if cash is not circulating in the market, it becomes difficult. This is the current reality."
In other words, provincially-managed enterprises are also suffering from management difficulties. The background lies in a striking decline in urbanites’purchasing power. Even when products are displayed in state-run stores, they do not sell because people have no money.
The Kim Jong-un regime used the COVID-19 pandemic as an opportunity to strictly restrict personal economic activities such as private trading. This caused urbanites’ cash income to plummet. Adding to this was severe inflation. According to ASIAPRESS's latest survey (August 28, 2026), an ordinary worker's average monthly wage of approximately 50,000 won can only purchase 2.9 kilograms of corn.
※ 10,000 North Korean won equals approximately 0.15USD (as of August 28, 2026)
Therefore, even when production occurs, goods do not sell, and most provincially-managed factories have fallen into financial difficulties as they cannot even recover their production costs. A reporting partner stated: "In the end, since no profit remains, production is being reduced or halted." Meanwhile, moves to export domestically-produced goods to China are becoming active. This will be explained in another installment.
◆Finding Outlets Through "Side Businesses": Bread Production, Worker Dispatch
Under these circumstances, one outlet that provincially-managed factories have found is "side business" production. To secure funds, factories have become active in producing goods not among their original product lines.
The most prominent items are bread and beer. A reporting partner explained: "Among provincially-managed factories, bread is performing relatively well. Now that controls are stricter and individuals cannot make and sell bread, many people purchase bread produced by factories. Other enterprises sometimes buy it and distribute it to their workers in place of wages or food rations. You frequently see people walking around on the streets carrying bags of bread."
Worker dispatch to construction sites and artisanal gold mining operations has also become active. A reporting partner in Ryanggang Province describes the current situation as follows:
"For example, the Kumyonsan Trading Company is carrying out apartment construction. In the past, construction companies would make individual contracts with workers seeking jobs, provide lunch, and give workers about 10,000 won per day. Now, they make contracts with enterprises and receive dispatched workers. The workers are mobilized to the construction site until the work is complete. They are provided lunch and dinner, and the enterprise pays 20,000 won per day per worker."
In the past, it was commonplace for construction enterprises to directly hire workers looking for jobs outside their workplace and pay them daily wages. But now, with individual economic activities under control, enterprises are systematically dispatching workers who have no work at their regular jobs and earning revenue this way. According to a reporting partner, workers themselves receive approximately 20,000 won per month from construction site mobilization.
The next installment will provide detailed reporting on wages, full-time employment, and the income levels of urbanites.
※ ASIAPRESS communicates with its reporting partners through Chinese cell phones smuggled into North Korea.
