South Korean firms in the joint industrial park in North Korea are sandwiched between North Korea's unilateral pay hike and South Korea's refusal to honor it.

The deadline for the March wage payment for the North Korean workers in the industrial complex in the North's border town of Kaesong is Monday.

North Korea has threatened to impose an arrears charge of 15 percent per month if South Korean companies do not pay the wages on time.

The South Korean government would not accept the North's unilateral move, saying Pyongyang violated a 2004 agreement that calls for two quasi-government committees from each side to set the wages together. The wage cap has been set at 5 percent.

Seoul has warned the South Korean firms operating in the Kaesong Industrial Complex that they will face punitive measures if they pay the wages that were raised single-handedly by the North.

South Korea does not want the wage row to serve as a precedent for the North to make unilateral decisions on the operation of the industrial complex.

The two Koreas have been in dispute since the North unilaterally decided in February to raise the wage level by 5.18 percent to US$74 per month starting in March for about 53,000 North Korean workers hired by South Korean firms at the Kaesong complex.

Seoul is seeking to hold talks with the North over the issue through a quasi-governmental committee.

None of the 124 South Korean firms have paid March wages to the North Korean workers.

A meeting of the quasi-government committee on April 7 failed to produce an agreement, and the sides have yet to set a date for another meeting.

During the April 7 meeting, North Korea insisted the pay hike is a "sovereign issue," which should not be subjected to negotiations.

"We are still sending messages to North Korea for further consultations on the issue," a Unification Ministry official said.

"Our position is to resolve the issue through dialogue."

The official asked South Korean firms in the Kaesong complex to join forces with the Seoul government, expressing concerns that "some companies think they are ready to pay the wages raised by the North to help facilitate the production of goods in a smooth manner."

"What is the most important thing is the companies involved join hands with the (South Korean) government."

The industrial complex, which opened in the early 2000s, is the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped communist North. (Yonhap)