Billions in tax breaks: how the “Arkada” factory turned state preferences into a sewing camp for prisoners and migrant workers from North Korea
One of Russia’s largest garment enterprises was exempted from a significant portion of taxes under promises of providing jobs to residents of Bashkortostan. However, local workers were first replaced by prisoners, and now both groups are being displaced by workers from North Korea, who allegedly work for almost no pay.
The garment factory LLC “Industrial Association Arkada” was opened in the town of Ishimba on January 26, 2022. It is located in the special economic zone (SEZ) “Alga,” which allows the company to significantly reduce its tax burden through preferential tax regimes and incentives. Authorities in Bashkortostan stated that Arkada’s main social mission is import substitution and reducing unemployment — creating new jobs and even organizing a training complex. The factory’s annual revenue is currently around 2 billion rubles.
According to our sources, almost from the very beginning of the factory’s operation, local residents were replaced with cheap labor — prisoners. For this purpose, a separate isolated section was created at the factory, functioning as a correctional center (UFIC).
However, even prisoners eventually became too “expensive.” Workers from North Korea began to be actively brought to the factory, and now they make up about 80% of the total workforce. The remaining non–North Korean workers have had their wages significantly cut and production quotas increased; pay rates are deliberately set so that earnings amount strictly to the minimum wage.
Non–North Korean employees are told directly that they are not welcome at Arkada and would be better off resigning voluntarily, as workers from North Korea are much cheaper.
As previously reported by our project, Russia is currently massively importing workers from North Korea, who allegedly work virtually for free (with all minimum earnings transferred to the North Korean authorities) and are treated as essentially slave labor.
