South Korea said on Tuesday it had reached an agreement with Pyongyang on a wage hike for North Korean workers at their Kaesong joint economic zone, ending a six-month dispute.
The breakthrough came despite inter-Korean tensions going through one of their sporadic surges after the South accused North Korea of engineering mine blasts that maimed members of a military border patrol. The 5-percent hike will increase the minimum workers' wage in Kaesong from $70.35 a month to $73.87, a spokesman for Seoul's unification ministry said. The agreement followed months of often testy negotiations prompted by Pyongyang's unilateral announcement in February that a 5.18-percent pay rise would be implemented.
The North's proposal exceeded a previously agreed 5-percent annual wage rise cap and Seoul responded by insisting that any such change had to be a joint decision. The Kaesong industrial estate, which lies just 10 kilometers (over the border in the North, hosts about 120 South Korean firms employing some 53,000 North Korean workers. Kaesong is a key earner for the cash-strapped North. The hard currency wages are kept by the state, which passes on a fraction - in local currency - to the workers. The South Korean companies get cheap labor as well as tax breaks from the government.
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