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Seo Jae-pyoung, the secretary general of the association of the North Korean defectors, poses for a photograph while demonstrating the use of a Workers' Party membership card holder during an interview with Reuters in Seoul, South Korea, April 22, 2016. REUTERS/Kim Hong-Ji

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By Ju-min Park and James Pearson

SEOUL (Reuters) - Kim Dan-bi's brother is the model of the establishment North Korean: an army veteran and member of the ruling Workers' Party, he is now a manager at a state enterprise.

But when he has the time, according to Kim, a defector now living in South Korea, her brother helps trade goods such as TVs and bedding smuggled from China, a sideline lucrative enough for him to have recently bought a car.

"Being in the Party doesn't really help financially," she said. "It is even burdensome to those who are running their own businesses."

His story illustrates the challenge posed to ruler Kim Jong Un by the nascent grey market economy that has taken hold in the isolated and authoritarian country, as his government prepares for a rare Workers' Party Congress set to begin on May 6.

For the thousands of delegates who will gather in Pyongyang, attendance at the event will affirm their status among the ruling class. For a growing number of North Koreans, however, money has overtaken Party membership when it comes to getting ahead, according to defectors who have fled to rival South Korea.

"If you join the Party, you lose free time which could be spent selling in the markets because of the Party events you're obliged to attend," said a former Party member and senior state official from Pyongyang who defected in 2014.

"Ordinary people think: this has got nothing to do with me," he said, referring to the preparations for next month's event.

He declined to be to be identified by name to protect family members still in North Korea.

PARTY CULTURE

Workers' Party culture remains omnipresent in North Korea, where most villages have a building where lectures are delivered by Party officials on Saturdays, often to distribute centralised propaganda in areas out of reach of traditional state media.

Some members, fearful of losing their membership card, keep it in a crimson pouch emblazoned with the gold hammer, sickle and paintbrush motif of the Party. One pouch obtained by Reuters was designed to be worn like a concealed gun holster, with an elasticated band across the chest that pulls the card close to the wearer's heart.

Party members are also obliged to attend Wednesday lectures after work, said Seo Jae-pyoung, who belonged to the Party before leaving North Korea in 2001 and maintains regular contact with sources inside the country.

The lectures have become more strictly controlled under Kim, he said, with a campaign under way to mobilise people ahead of next week's Congress. Kim used the Party's 70th anniversary last year to promise to introduce a "people-first" politics.

Once a regular event, the Workers' Party Congress was last held in 1980.

Some Pyongyang-watchers take the meeting as a sign that young leader Kim is transforming a country his father Kim Jong Il ruled through back-channel dealings into a more "normal" state, where formal Party processes are ingrained.

But defectors and academics say the importance of membership has dwindled since the devastating famine of the 1990s, which paved the way for a bottom-up and informal network of markets that now provides for most North Koreans in place of the state.

"The difference between being a Party member or non-member used to be the difference between being treated like a human or not," said Seo, who works with defectors in South Korea.

"The pride people got from being a member of the Party has weakened. People only care about money now."

MONEY AND POWER

No data on party membership in North Korea is available, although estimates have put the number at between 3 million and 4 million out of a population of roughly 25 million.

Party membership used to be the key to better jobs and status in North Korea, defectors said.

Obtaining a coveted place in the hierarchy often entailed shows of loyalty, such as cleaning the areas around statues of Kim Jong Il and Kim Il Sung, the current leader's grandfather and founder of the state, or planting flowers at revolutionary or historical sites.

For the few at the top, membership can now be a route to riches as, fearful of losing its traditional grip over society, a Party that still officially espouses a Soviet-style command economy is starting to embrace the market.

"At the top end of the economic scale, Party people are among those making the most money - using their political connections to get access to resources," said Christopher Green, a researcher at Leiden University, in the Netherlands, specialising in North Korea's economy.

But for the majority, getting on in private business is more important than working your way up the Party ladder.

One defector who was a doctor and Party member in North Korea and arrived in Seoul in 2014, said medics at the Party-controlled hospital where he worked were not formally paid, but received bribes for treating patients.

He supplemented that income by trading small electronics and jewellery smuggled from China in his off-hours, he said, speaking on condition of anonymity.

"At hospitals, doctors work out their shifts so half of them can go out to sell things, and half can stay to treat patients," he said.

(Editing by Tony Munroe and Alex Richardson)

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