South and North Korea have agreed to hike the minimum wage by 5 percent for North Korean workers at a joint industrial park in the North, a government official said Tuesday, a move that will help resolve a monthslong row.
The two Koreas have been embroiled in a dispute following North Korea's unilateral decision to hike the minimum wage by 5.18 percent for the about 55,000 North Korean workers at the Kaesong Industrial Complex in the North's border city of the same name.
The quasi-state committees from the two Koreas reached an agreement on Monday to hike the wage to US$73.87, the most contentious issue in the dispute, according to a ranking official at the Unification Ministry. A 5 percent hike is the same level at which the wage has been increased every year so far.
"The most pressing issue of the wage cap has been resolved though there is still a long way to go," the official said, asking not to be named. "But the move is expected to support the stable supply of labor and improve business conditions."
The move is expected to raise the total monthly wage by far more than 5 percent when other compensation is included, according to an official at the group of 124 South Korean firms that are running factories in the park.
The agreement came even as military tension has heightened on the divided peninsula following a land mine explosion blamed on the North in the heavily fortified demilitarized zone.
The North has denied any role in the blasts, rejecting Seoul's call for apologizing for the incident that seriously wounded two South Korean soldiers.
The joint factory park, opened in 2004, is the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped North, while South Korea has utilized cheap but skilled North Korean laborers.
Seoul has rejected Pyongyang's unilateral move to hike the wage, saying that it breaches a 2004 agreement that calls for the two sides to set wages through consultations.
In July, the two sides held talks of the joint committee that operates the complex, the first since June last year, but they failed to reach an agreement.
The ministry said that the two Koreas plan to hold a meeting of the committee to discuss how to revise labor guidelines.
The government official said that the two sides have agreed to continue to set the wage cap through consultations.
"By taking into account the grave situation facing inter-Korean ties, the government plans to take measures to develop the complex," the official said.
The operation of the complex has been highly swayed by the level of tension on the peninsula. In April 2013, the North unilaterally shut down the park for about four months. (Yonhap)