South to give penalties amid Kaesong wage hike

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South to give penalties amid Kaesong wage hike

The Park Geun-hye administration has decided to penalize South Korean companies if they accept North Korea’s demand for a salary increase at the inter-Korean industrial complex in Kaesong.

“We will soon send official requests to South Korean companies that operate factories in Kaesong and urge them to pay the same wages to the North Korean workers,” an official from the Ministry of Unification said on Tuesday.

“The notices to the companies will include the guidelines that they should follow and legal and administrative penalties if they fail to comply.”

The move is to counter the North’s unilateral decision to increase the wages of its laborers in Kaesong.

In November last year, the North revised its law governing the inter-Korean industrial complex largely to serve its own benefits.

Among the revisions was the abolishment of the ceiling limit for minimum wage for some 53,000 North Korean workers employed by 120 South Korean companies.

The North also insisted that Kaesong companies pay their workers 15 percent of their base salary, plus any overtime wages and other living expenses, as a part of social insurance fees.

South Korean companies currently only pay 15 percent of base salary. This would increase the average monthly wage in Kaesong from $155 to $164.10.

The North also recently made another move to increase salaries. It informed the South Korean government that the minimum monthly wage will be increased from $70.35 to $74 starting this month.

Seoul has protested Pyongyang’s unilateral decision and requested to sit down for talks to settle the issue, but the North has yet to respond.

“We want to prevent our businessmen from giving in to the North’s pressure,” said the Unification Ministry official. “The specific penalties, however, were not decided.”

“The North may make more unfair moves such as withdrawing the workers, limiting the supply of manpower and sabotage,” the official said. “But if we fail to follow a greater cause just to get by, we will eventually face a worse situation.

And the South Korean companies also agree that this is not the kind of problem that can be resolved [by accepting the North’s demand].”

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