A) It's perfectly possible, Literacy rates are generalized to adult populations, if you teach every single child reported as being alive to read, then every single child you have accounted for will be able to read. Is it possible there are feral children in the woods of North Korea that exist? Sure. Is it possible there are some 90+ year old deserters living in the mountains of NK that never learned how to read under the imperial government? Sure. Is it likely? No, not really.
B) Fun fact with those 'labor camps' (aka prisons on par with the US, not a high bar, sure, but on par with them.) No evidence has ever been found by UN investigators that 'generational' punishment has happened. Ever. Not one single survivor has testified to this under oath in international court. Not one single log book has ever been found, not one single visit to the prisons has ever revealed this. This is mostly a myth created by the South Korean Government, who pays defectors for life (or imprisons them for life) depending on how willing they are to tell stories about their life to international media. The defectors that disagree with the SK narrative are usually imprisoned for life (legally they are all enemy combatants/rebels according to SK law, even the civilians, they have no rights). The ones that agree get media contracts they have to fulfill, or its off to jail. This is often why their stories are so over the top and make no logical sense.
See: Yeonmi Park as an example of someone whose entire life story has been debunked multiple times, and who has become a meme because of how incredibly easy it is to debunk any thing she has ever stated about North or South Korea. I mean the lady literally said it's illegal to criticize the North Korean Government in South Korea...