S Korea businessmen demand early settlement of Kaesong wage row

S Korea businessmen demand early settlement of Kaesong wage row

SEOUL  - South Korean factory owners called Tuesday for the early settlement of a damaging wage dispute in the Kaesong joint industrial zone and North Korea gave a positive response, a businessman said.

The North announced last month that it would unilaterally raise the wages of more than 50,000 North Korean workers employed by 125 South Korean firms operating in Kaesong, just north of the border between the two countries.

South Korea demurred, insisting that under a previous agreement employment conditions in the zone could only be adjusted with the agreement of both sides.

A group of 17 South Korean businessmen visited Kaesong Tuesday for talks with North Korean officials, led by Chung Ki-Sup who heads the council of South Korean companies operating in the zone.

On his return Chung said the North's officials responded positively when his delegation called for an early resolution of the wage dispute.

"They promised to make efforts when we called for (early) settlement," Chung told reporters, adding both sides agreed that the row should be resolved as soon as possible.

With the North's unilateral proposal supposed to take effect Friday, South Korean owners are concerned their company managers might come under intense pressure to comply.

Before crossing the border, Chung said the businessmen were "in a dilemma" because they could not simply reject the North's demand.

The South Korean government has urged them not to yield to pressure from North Korea.

So far Pyongyang has rejected Seoul's requests for official talks on the dispute, arguing it has no need to consult over its "legitimate" right to amend working conditions.

The North's proposal would increase the average monthly sum the South pays for each worker - including allowances, welfare and overtime - from $155 to $164.

In 2013 the North effectively closed down the industrial park for five months by withdrawing its workers following a surge in military tensions.

Many South Korean firms operating there, mostly manufacturers of low-priced household goods, are still reeling from financial losses during the shutdown.

Kaesong opened in 2004 and has survived repeated inter-Korean crises that closed down every other avenue of co-operation.

But the North's decision to pull out its workforce in 2013 took most by surprise, especially as it was the North that reaped the greater benefit from Kaesong.

The hard currency wages are kept by the state, which passes on a fraction - in local currency - to the workers.

The South's firms get cheap labour on top of preferential loans and tax breaks from the South Korean government, which also effectively underwrites their investment.

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