North drops wage claim

North Korea has apparently withdrawn its demand for a wage hike at the Kaesong Industrial Complex, suggesting instead that the monthly salary should be raised by the maximum rate allowed under an inter-Korean agreement.

The Unification Ministry in Seoul announced yesterday that the North had earlier proposed the minimum monthly wage be raised by 5 percent. If the South Korean organization managing Kaesong businesses agrees, the increase will apply, retroactively from Aug. 1 this year to July 31 next year. The current minimum wage is $55.13, according to the ministry, and the 5 percent raise would bring it up to $57.88.

In July, the North demanded that the monthly salary be increased to $300 and then it be continuously raised by 10 to 20 percent annually. Under the current agreement, wages may not be increased by more than 5 percent per year.

Lee Jong-joo, spokeswoman at the ministry, said the South Korean committee would discuss the matter with representatives of South Korean businesses operating in Kaesong and would try to reach an agreement with the North as soon as possible.

But Lee stopped short of saying the North has completely withdrawn its previous demand for the hefty increase.

“In their document sent to us, North Koreans made no mention of the $300 proposal,” she said. “At the moment, we can’t categorically conclude that they’ve taken that demand off the table. They only said we should stick to the 5 percent rate for the time being.”

Another government official, speaking on condition of anonymity, said the South hasn’t entirely ruled out the possibility that the North would once again request a $300 monthly wage.

Also in July, North Korea insisted that the South pay $500 million for land use at the complex, even though the South had already paid $16 million in 2004. Lee said the North this time made no reference to that particular demand.

This past summer, the two Koreas held four rounds of working-level discussions on the Kaesong complex. As the two wrangled over land use and wage issues, the fate of the joint industrial site, a symbol of inter-Korean reconciliation, came under cloud. South Korean companies in Kaesong scaled back their operations or pulled out entirely amid growing security concerns.

North Korea has sent mixed signals as of late. Since August, it has freed a detained engineer and four South Korean fishermen who had veered north of the maritime border, lifted restrictions on cross-border trips for South Koreans and agreed to stage reunions for separated families.

But the North also recently claimed its experimental uranium enrichment for nuclear weapons production was in its final stage and declared that it was building more bombs from extracted plutonium.

But South Korean businesses at least welcomed the announcement yesterday. Moon Chang-sup, head of the shoemaker Samdeok Starfild and former chief of the association for South Korean companies in Kaesong, said the North’s move wasn’t entirely unexpected.

“When the North pushed for $300, a lot of us felt it was just a tactical move to get what they want [in other areas],” Moon said.

“At a time when Kaesong factories are competing with those in China and Vietnam, I think North Koreans themselves knew it would be unrealistic to push up the wage to $300.”

By Yoo Jee-ho [jeeho@joongang.co.kr]