Two Koreas reach ac­cord in Kaesong wage row

The Pak Banker - - BUSINESS -

South Korea said Tues­day it had reached agree­ment with Py­ongyang on a wage hike for North Korean work­ers at their Kaesong joint eco­nomic zone, end­ing a six-month dis­pute.

The break­through came de­spite in­ter-Korean ten­sions go­ing through one of their spo­radic surges af­ter the South ac­cused North Korea of en­gi­neer­ing mine blasts that maimed mem­bers of a mil­i­tary bor­der pa­trol. The five-per­cent hike will in­crease the min­i­mum work­ers wage in Kaesong from $70.35 a month to $73.87, a spokesman for Seoul s uni­fi­ca­tion min­istry said. The agree­ment -- reached late Mon­day -- fol­lowed months of of­ten testy ne­go­ti­a­tions prompted by Py­ongyang s uni­lat­eral an­nounce­ment in Fe­bru­ary that a 5.18-per­cent pay rise would be im­ple­mented. The North s pro­posal ex­ceeded a pre­vi­ously agreed five-per­cent an­nual wage rise cap and Seoul re­sponded by in­sist­ing that any such change had to be a joint de­ci­sion.

On Mon­day, both sides agreed to dis­cuss the re­main­ing 0.18-per­cent raise later, the min­istry said. The Kaesong in­dus­trial es­tate, which lies just 10 kilo­me­tres (six miles) over the bor­der in the North, hosts about 120 South Korean firms em­ploy­ing some 53,000 North Korean work­ers. Kaesong is a key earner for the cash-strapped North. The hard cur­rency wages are kept by the state, which passes on a frac­tion -- in lo­cal cur­rency -- to the work­ers. The South Korean com­pa­nies get cheap labour as well as pref­er­en­tial loans and tax breaks from the gov­ern­ment.

Kaesong opened in 2004 and has gen­er­ally man­aged to ride out re­peated in­ter-Korea crises, even when ev­ery other av­enue of co­op­er­a­tion was closed off. The glar­ing ex­cep­tion came in 2013, when Py­ongyang ef­fec­tively shut down the zone for five months by with­draw­ing its work­ers.

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