P`yang Agrees to Wage Hike for Kaesong Complex

North Korea has asked South Korea to raise wages of North Korean workers at the Kaesong industrial complex five percent, the previously agreed hike, until July next year.

Vice Unification Ministry Spokesman Lee Jong-ju said yesterday in Seoul, “The North Korean Special District General Bureau asked South Korea’s industrial complex management committee to stick to the previously agreed annual raise of five percent Thursday. It also expressed its opinion to sign a contract as soon as possible. After discussing with companies located in the industrial park, we’ll sign a contract with North Korea.”

If the deal is finalized, the minimum wage of North Korean workers will rise from 55.12 U.S. dollars to 57.88 dollars.

In a meeting between working-level officials of the two Koreas in June, the North asked for a raise to 300 dollars a month per worker, raise the annual wage hike from five percent to 10-20 percent, and pay 500 million dollars in rent for the complex.

The North’s requests made in June were not reflected in the agreement, however. Instead, it only suggested its new demand.

“Though we asked Pyongyang why it changed its stance, it gave no detailed information. North Korean officials said, ‘Just stick to the newly suggested solution.’ Since North Korea just asked us to raise the minimum wage, we cannot say whether it has canceled or changed its previous demand,” the spokesman said.

A South Korean official said, however, “Since Pyongyang urged Seoul to stick to the previously agreed minimum wage level, it will be hard for the North to stick to its argument that the monthly wage should be raised to 300 dollars. Given recent developments in inter-Korean relations, North Korea seems to have postponed its wage demand.”

Certain observers say the new demand results from its attempts to legally wring out money from South Korea at a time when international sanctions on the Stalinist country have grown stronger.

Jo Bong-hyeon, a research fellow at Industrial Bank of (South) Korea, said, “After reaching a final agreement on the wage increase, which should be dealt with every year, North Korea could mention it again in bilateral talks. Particularly, North Korea is likely to strongly ask South Korea for more rent for the complex.”

zeitung@donga.com