South Korea accused Pyongyang on Monday of masterminding a work slow-down at the Kaesong joint industrial zone in a bid to push wage-rise demands for the 53,000 North Korean workers employed there. The Unification Ministry, which is urging the 120 South Korean firms in Kaesong to resist the wage increase, said workers at a number of plants were cutting production and refusing to work extra hours.
"North Korea must immediately stop instigating workers there to reject overtime work or stage a go-slow," ministry spokesman Lim Byeong-Cheol told reporters. South Korean factory owners said such labour action was "unprecedented" and warned that it could seriously impact their operations.
The North unilaterally announced in February a salary hike for all the workers in Kaesong, which lies just north of the inter-Korean border. South Korea demurred, insisting that under a previous accord, employment conditions in the zone could only be adjusted with the agreement of both sides. Despite a government warning to resist the wage hike or pay fines, dozens of firms have signed a note promising to pay the increased salary. The South Korean companies in Kaesong get cheap labour on top of preferential loans and tax breaks from their government, which also effectively underwrites their investment.
Kaesong opened in 2004 and had survived repeated inter-Korean crises that closed off every other avenue of co-operation. But in 2013, the North effectively shut down the zone for five months by withdrawing its workers following a surge in military tensions. Many firms are still reeling from financial losses from the shutdown. 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. "Labour action is unprecedented in Kaesong, and it will aggravate our difficulty because many firms there are still reeling from the 2013 shutdown," a senior official at an association of South Korean factory owners told AFP.