N.Korean Demands Threaten Kaesong Complex

Chosun Ilbo
The inter-Korean Kaesong Industrial Complex in North Korea, now in its second year, is in trouble due to “unreasonable” demands from Pyongyang, South Korean companies there say.

North Korea late last year suggested that South Korea pay North Korean workers according to their academic background. “North Korea demanded that we pay four-year college graduates 30 percent more and two-year college graduates 10 percent more than high school graduates, depending on their type of work,” a businessman said. As of last year, North Korean workers in the industrial complex got an average monthly salary of US$67, including overtime.

But businesspeople in the complex said the demand ignores realities. “Most of the workers at the Kaesong Industrial Complex are doing menial jobs, so staff with a higher academic background are not necessarily more productive,” one said. “Moreover, if we should introduce the system, the North Korean authorities would inevitably intervene in the hiring process. Our autonomy in personnel management and governance structure could suffer.”

Some 13,000 North Koreans work at the Kaesong complex. Four-year college graduates and two-year college graduates account for about 10 percent of them. A South Korean government official said, “If we introduce this system, businesspeople say their spending on wages will rise by about 4-10 percent.” Seoul wants to continue negotiations with the North. Pyongyang, which takes most of the workers’ salaries, is already demanding considerable fees for issuing permits to South Korean businesspeople and officials who want to stay for extended periods.

Even if the fee and wage issues are resolved, nobody knows what requests North Korea will make next. Kim Kyu-chul, the chairman of civic group Citizen’s Solidarity for Inter-Korean Economic Cooperation, said Tuesday, “We’re not sure if the free trade agreement with the U.S. will recognize products made at the Kaesong Industrial Complex. And the productivity there is not high due to various regulations. If there are wage hikes, South Korean businesses there will suffer.”


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