Time to give some leewaySouth Korean companies pay North Koreans working in the Kaesong Industrial Complex, an inter-Korean industrial park in North Korea, a minimum wage of $70.35 monthly. In accordance with the agreement, the basic wage cannot rise more than 5 percent a year.
But Pyongyang wants to ignore the contract and is demanding the cap on wage hikes be scrapped so that the minimum wage can rise by 5.18 percent to $74 for every one of the 54,000 North Korean workers in the joint industrial park. After Seoul refused to accept the unilateral change in wage conditions, the 123 companies that have stakes in the joint-venture compound are stuck in the middle, worrying that there will be disruptions in their production in case Pyongyang pulls out the workers.
A committee meeting was held at the Kaesong complex to solve the impasse. The marathon talks, which went on until the wee hours of last Friday, produced no agreement. The envoys, who had to report and take orders from Seoul and Pyongyang, underscored the problems in inter-Korean ties.
Seoul takes the position that it cannot accept Pyongyang’s unilateral demand because it would violate agreed upon terms. South Korea claims that the salary amount was not the issue, but ignoring contract terms was. It offered to negotiate wages if Pyongyang eased on other working conditions, such as stringent regulations on telecommunications, traffic and customs clearance. Pyongyang wants to stick to the wage issue.
It was Pyongyang’s fault in the first place, since it demanded a wage hike out of the blue. It is true that North Korean workers in the industrial park are some of the most poorly paid in the world. The average pay for the workers is $141 per person including overtime, which is sharply lower than China’s $659, Indonesia’s $259 and Vietnam’s $193. Insiders say South Korean employers can afford to raise the base wage. The gap between the current 5 percent cap and the North’s demand for an increase of 5.18 percent amounts to just $0.13. South Koreans currently earn 21.4 times more than North Koreans. It is important to respect principles in state affairs, but South Korea has room to be more engaging. The success of the Kaesong project would be the most solid preparation for the peaceful reunion of the two Koreas. JoongAng Ilbo, July 18, Page 26