August 18, 2015 / 2:35 AM / 2 years ago

North, South Korea reach deal on wage hike at joint factory park

The inter-Korean Kaesong Industrial Complex is seen across the demilitarised zone (DMZ) separating North Korea from South Korea in this picture taken from Dora observatory in Paju, 55 km (34 miles) north of Seoul, September 25, 2013. REUTERS/Lee Jae-Won

SEOUL (Reuters) - North and South Korea agreed to increase the minimum wage for North Korean workers at a joint factory park by 5 percent, a South Korean industry representative said, ending a months-long dispute despite heightened tensions on the Korean peninsula.

The compromise, reached Monday, raises the monthly wage to $73.87 at the Kaesong Industrial Complex, which is just north of the heavily fortified inter-Korean border.

“The fact that dialogue between South and North met with good results is welcomed and a good signal for stable management in Kaesong,” Yoo Chang-geun, vice chairman of the Corporate Association of Kaesong Industrial Complex, said on Tuesday.

The complex is a key source of revenue for the impoverished North, employing 53,000 people whose salaries are paid directly to the North Korean government by the 125 South Korean companies operating there, mostly making textiles and industrial parts.

Kaesong is the last significant vestige of cooperation spawned by the neighbors’ first summit meeting 15 years ago. North Korea shut down the complex for five months in 2013, during a period of diplomatic tension.

The new wage is slightly below the $3.65 increase, or 5.18 percent, North Korea had demanded, which exceeded the annual increase of 5 percent agreed when the zone was established.

Tension between the two Koreas escalated early this month, with Seoul blaming Pyongyang for laying landmines that exploded in the Demilitarised Zone, wounding two South Korean soldiers. North Korea denied any involvement.

North Korea on Monday began blasting propaganda over loudspeakers across the border, days after the South took a similar step. The two sides had refrained from such tactics since 2004.

On Monday, U.S. and South Korean forces began annual joint military exercises that the North denounces as a preparation for war.

Editing by Tony Munroe and Stephen Coates

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