North Korea is again resorting to mean tactics over the South Korean businesses operating in the Gaeseong industrial park ― making or threatening a unilateral decision, insisting on excessive demands, and rejecting negotiations.
The latest trouble surrounds the North’s decision last month to make changes to the wage system for 53,000 workers employed by the 124 South Korean firms in the park located just north of the border.
The North said it was increasing the workers’ minimum wage to $74, up 5.18 percent from the current $70.35. It also said overtime allowances would be added to basic wages when calculating the social security payment, which has a rate of 15 percent. South Korean officials say this change alone would give the North $450,000 in additional revenue each month.
The officials said the labor cost of South Korean businesses will rise to $164.10 per worker from $155.50 if the North’s proposal is taken.
It is common sense that wages tend to increase, if not at money-losing businesses. It is also common sense that discussions on how much the wage is raised should involve all concerned parties. But this is not the case in Gaeseong.
North Korean officials insist that they don’t need to negotiate pay raise with the southern side because the factories are in their territory. On Wednesday, they even refused to take a petition from the visiting proprietors of the businesses. The North had been rejecting the Seoul government’s call for talks as well.
This is an obvious violation of the August 2013 agreement in which the two sides pledged to adjust the Gaeseong wages through mutual consultations. Moreover, the agreement put a 5 percent cap on the annual increase. The minimum wage increase demanded by the North alone represents a 5.18 percent hike.
More broadly, the agreement called on the two sides to elevate the labor, wage and insurance systems at Gaeseong to international standards. The North is turning all this into sheets of worthless paper.
It is not hard to guess what the North has in mind: It needs more U.S. dollars for its foreign exchange coffers or use of the industrial park as leverage in its dealings with the Seoul government, or both. They sometimes tied the operation of the industrial park to political issues like the anti-Pyongyang leaflets sent by South Korean activists and South Korea-U.S. military exercise.
To be fair, the North benefits a lot from preserving the 11-year-old project, which is also a symbol of reconciliation and economic cooperation with the South. We hope they do not make a silly choice.
