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Kaesong wage hike deal

August 18, 2015

South Korea has said it's reached an accord with Pyongyang on a wage increase for North Korean workers at their Kaesong joint economic zone. The agreement came after months of bickering and despite renewed tensions.

https://p.dw.com/p/1GGyP
Kaesong industrial complex
Image: Reuters

South Korean officials confirmed Tuesday they'd reached a deal with the government across the border on a wage hike for North Koreans working in the two countries' joint economic zone of Kaesong.

The breakthrough came after months of testy negotiations prompted by Pyongyang's unilateral announcement in February that a 5.18-percent wage increase would be implemented no matter what.

The two sides now agreed on a 5-percent hike that was to increase the minimum wage in Kaesong from $70.35 (63.50 euros) a month to $73.87.

Win-win situation?

"The fact that dialog between the South and North met with good results is welcomed and a good signal for stable management in Kaesong," the vice chairman of the Corporate Association of Kaesong, Yoo Chang-geun said in a statement.

The deal was struck despite inter-Korean tensions going through on of their sporadic surges.

The Kaesong industrial estate lies just 10 kilometers (six miles) over the border in the North and hosts some 120 South Korean firms employing about 53,000 North Korean workers.

The complex constitutes a key earner for the cash-strapped North, with the hard currency wages being kept by the state and local workers being paid in local currency.

South Korean firms benefit from cheap labor as well as from preferential loans and tax breaks from the government.

hg/sri (AFP, Reuters)