North Korea relaxed state control of salaries last month, a Pyongyang government economist has said, outlining a change in policy intended to boost production by giving companies latitude to provide workers with financial incentives.
In an interview with the Associated Press, Ri Ki Song, a professor at the Institute of Economics at North Korea's Academy of Social Sciences in Pyongyang, said enterprises are now allowed to use some of their earnings to pay workers more.
Until recently, most salaries were set by the state. The new policy gives managers of factories and other businesses the right to determine workers' salaries if they are able to improve productivity.
The change follows a similar move last year to give managers at North Korean farms more power to make management decisions and to allow farmers to keep any surplus harvest to sell or barter instead of turning them over to the state.
Mr Ri said: "After repaying the state for its investment, enterprises can set salaries themselves, regardless of salaries fixed by the state, and pay workers according to their performance."
Companies must also put aside funds for investment, continued production, development of technology and cultural activities, he added.
But Mr Ri said the new economic management methods enacted on April 1 were not signs that North Korea is adopting a capitalist free market system.
"This is nothing to do with reform and opening," Mr Ri said. "As I've said, the socialist ownership of the means of production is firmly established in our country, and we defend this."
Foreign governments have looked for indications that North Korean leader Kim Jong Un might be open to reform since coming to power in December 2011. Mr Kim, the third generation of his family to lead North Korea since 1948, inherited a nation plagued by chronic food, fuel and power shortages. He has said improving the economy is a priority, acknowledging economic hardship in North Korea and pledging to raise the standard of living.
Mr Kim said in a speech in January said the country's most important task is the "building of an economic giant" and called for all of the year's economic undertakings to be aimed "a radical increase in production and stabilising and improving the people's living standards".