North, South Korea reach agree­ment in Kaesong wage row

The China Post - - WORLD 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 six­month 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 US$70.35 a month to US$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 kilo­me­ters (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 la­bor 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.

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