Is doing business in North Korea ethical?

15th September 2011, Comments 0 comments

Outsourcing work to upcoming economies like China and India is not as cheap as it used to be. So sending work to North Korea, where labour costs are extremely low, could provide a solution. But is it ethical to do business with a dictatorship which ignores human rights?

Rotterdam consultant Paul Tjia puts Dutch companies in contact with businesses in North Korea. Often it is skilled labour that is required – for instance for software development, but workers in the communist country are also used for manufacturing clothing. So which companies do business with North Korea? All Mr Tjia will say is that South Korean Samsung has its mobile telephone software developed by its northern neighbour and that some credit card companies have their administration done there.

Dutch companies which do business with North Korea prefer to remain anonymous. In 2008, Dutch daily found that firms were not keen on discussing their links with the dictatorship. Mr Tjia thinks there’s a risk of damaging their image because North Korea is a controversial trading partner.

Trade missions He thinks North Koreans benefit from foreign business: “The more contact the country has with the outside world, also in economic terms, the better it is for the people. At the moment they are very isolated; they do not know what is going on in the world. They have little contact with foreigners. In situations like this I think business contacts are very important.”

That’s why he cannot understand why Amsterdam’s Chamber of Commerce has withdrawn from trade missions to the country. He thinks it is the wrong political decision.

Political freedom The consultant compares North Korea to China in the 1970s. Back then that country was very isolated.

“But then it started trading with foreign customers more and more. Foreign investment began to come in. There was much more contact than before. Twenty to thirty years later you can see the effect: huge economic development. There’s more political freedom than 30 years ago, although there is still a lot to be done,” says Mr Tjia.

Isolation Human Rights organisation Amnesty International says it is not ethical to do business with a government which regularly violates human rights. Spokesperson Nicole Sprokel:

“People often think, if we just improve employment and arrange exchanges, human rights and political rights will follow suit. We don’t believe that automatically happens. It is not something that comes about as a consequence of economic development.”

Mr Tjia disagrees. Mainly because trade brings North Koreans into contact with foreigners and therefore breaks their isolation. Sometimes employees have to travel abroad for training or to meet foreign customers.

Minimum wage But Ms Sprokel believes that the rights of employees working for companies that take Dutch orders are not properly protected. There is an official minimum wage in North Korea, but it is not clear whether companies actually adhere to it. Ms Sprokel says people cannot live on the minimum wage anyway.

There is no possibility to fight low wages because unions are banned in the communist country. Anyone who criticises the regime can be thrown into prison says Amnesty.

Companies should not just look at the finances when they outsource work. They should also consider whether the working conditions meet international standards, says Ms Sprokel. Something that is difficult to check in a country like North Korea. In the worst cases, outsourced work is done in forced labour camps.

Technological progress Whether or not outsourcing work to North Korea is ethical, it is definitely better for technological progress, the reports. Mr Tjia agrees. He points out that the IT sector is very popular with lots of young people wanting to study it. And there is work in this sector from foreign companies. Apparently young North Koreans are particularly good at internet security.  

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