South aims for talks on North’s wage demand

Only a month after taking his job, Unification Minister Hong Yong-pyo is faced with the difficult task of solving a test set by Pyongyang over a 5.18 percent wage raise demand.

In a continuation of what many see as unpredictable behavior, Pyongyang unilaterally notified Seoul last month that the monthly minimum wage of North Korean workers at the Kaesong Industrial Complex must be raised by 5.18 percent to $74 from the current $70.35.

The $3.65 gap may not seem like an outrageous demand at first. But a deeper look at the issue shows Pyongyang’s brazen disregard for a joint agreement made by the two Koreas two years ago and reveals the North’s intention to gain an upper hand in setting the course of future inter-Korean talks.

The joint industrial complex located just north of the highly militarized border was shut down for five months after the North withdrew its workers in April 2013. Upon resuming operations, Seoul and Pyongyang agreed that decisions over management of the factory complex, such as wages and working conditions, must be discussed bilaterally.

The labor regulations for North Korean workers at Kaesong stipulate that a 5 percent ceiling for wage increases, which the North ignored by calling for a 5.18 percent hike.

In response, the Unification Ministry has demanded that its counterpart come to the table to compromise.

“We can’t accept a wage increase demand that goes beyond the 5 percent range even if that is 5.0001 percent,” said a ministry official, who requested anonymity.

The ongoing tug-of-war between the two sides has raised speculation that Pyongyang is attempting to gain the upper hand in its dealings with Seoul.

“It is the North’s common strategy to come out aggressive in negotiations [by making strong demands],” said Kim Keun-sik, a professor of political science and foreign affairs at Kyungnam University. “Seoul should be prudent enough to induce Pyongyang to the negotiating table by understanding its true intention.”

But this year is considered the Park Geun-hye administration’s last chance to achieve tangible outcomes from its dealings with the North, and the government is under pressure to seek a breakthrough.

Against this backdrop, the government appears to have not ruled out the possibility that it could accept the North’s demand.

Lim Byeong-cheol, the Unification Ministry spokesman, said that what is important is that the two sides tackle the issue bilaterally, adding that raising the 5 percent ceiling by 0.18 percent was not entirely out of the question.

One North Korea expert from a conservative-leaning think tank said Pyongyang appears to be sincere in its 5.18 percent wage hike demand.

“If the North wanted to walk away from the joint project, it would have called for a much higher increase [knowing the South would never accept it],” said the pundit, who spoke on the condition of anonymity.

BY CHUN SU-JIN, KANG JIN-KYU [kang.jinkyu@joongang.co.kr]