If you’re a South Korean business with a factory at the Kaesong Industrial Complex, I hope you’ve stocked up on your K-Y Jelly:
North Korea has removed the legal limit for wages paid to its workers at the Kaesong Industrial Complex, the North’s propaganda site said Saturday, a move that could cause tension with South Korea, which co-runs the industrial park with the reclusive regime.
The North revised the Act on Kaesong Complex laborers late last month, scrapping the upper ceiling for workers’ wages, according to Uriminzokkiri, one of the country’s major propaganda sites.
The site also said that raises will be set every year by the supervisory committee overseeing laborers at the complex.
According to the Asia Gyeongje, the Uriminzokkiri article said the North changed 10 provisions in the Kaesong worker regulations, although the scrapping of the wage increase ceiling was the only one specified. Presumably, one would imagine, to make sure the South Koreans didn’t miss it.
Needless to say, there is concern that the North Koreans will place more pressure on South Korea by demanding high salary hikes at Kaesong in future negotiations, and Seoul has condemned the labor regulation move as unilateral (see link above). The labor regulations as they existed before, agreed upon by both Koreas in 2003, placed a 5% ceiling on annual raises to the minimum wage paid to North Korean workers at Kaesong, which currently stands at US$70.35 a month. Businesses in Kaesong say, however, they pay over US$150 a month when you take into consideration overtime and incentives. Interestingly, they also complain that costs increased as they replaced the South Korean-made Chocopies they’d been giving out as snacks with North Korean-made snacks, a fact that probably tells you everything you need to know about North Korea’s economy.
To be frank, I don’t feel especially bad for the South Korean firms at Kaesong, especially since every time I hear the Kaesong business owners’ association open its mouth, it’s to do things like call for a lifting of sanctions on the North or demand an end to ballooning leaflets. The progressive Seoul Shinmun ran an editorial condemning the North’s move, further evidence of the strange bedfellows Kaesong brings together.
To make this more interesting, the North’s announcement via Uriminzokkiri came just before Seoul making it known that it was considering offering incentives to Pyongyang (i.e., paying the North off) to restart the family reunion program.