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North Korea demands higher wages for workers employed by South at joint industrial park

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SEOUL, South Korea — North Korea has told rival South Korea that it plans to unilaterally raise the minimum wage for North Koreans employed by southern companies at a jointly run industrial park starting in March, officials said Thursday.

South Korea rejected the North's decision, delivered in a fax message on Tuesday, because it wasn't a mutual agreement, an official from Seoul's Unification Ministry said on condition of anonymity, citing office rules. The official said the South offered to meet next month to discuss the wages of workers at the Kaesong industrial park in North Korea, but the North refused to consider the offer. The ministry said it will continue to press the North to hold talks on the wages.

Yang Moo-jin, a professor at the University of North Korean Studies in Seoul, said North Korea has been trying to gain the upper hand over South Korea in decision-making at the park, which has been a significant source of income for the North since it opened in 2004.

PHOTO: This Wednesday, Sept. 25, 2013, photo, shows a joint run industrial complex between South Korea and North Korea, in Kaesong as photographed from the Dora Observation Post in Paju, South Korea near the border village of Panmunjom, which has separated the two Koreas since the Korean War. North Korea has told South Korea that it plans to raise the minimum wage for North Koreans employed by southern companies at a jointly run industrial park starting in March 2015, officials said Thursday, Feb. 26, 2015. (AP Photo/Lee Jin-man)
This Wednesday, Sept. 25, 2013, photo, shows a joint run industrial complex between South Korea and North Korea, in Kaesong as photographed from the Dora Observation Post in Paju, South Korea near the border village of Panmunjom, which has separated the two Koreas since the Korean War. North Korea has told South Korea that it plans to raise the minimum wage for North Koreans employed by southern companies at a jointly run industrial park starting in March 2015, officials said Thursday, Feb. 26, 2015. (AP Photo/Lee Jin-man)

Even if South Korea ultimately rejects North Korea's demand for higher wages, the North is unlikely to withdraw all its workers from the park because it is desperate to secure more foreign investment, Yang said.

About 120 South Korean factories employ more than 53,000 North Koreans at the Kaesong industrial park, according to the Unification Ministry.

The two countries have followed an accord since the park's establishment that wages are determined through mutual agreement and that annual increases in the minimum wage will not exceed 5 percent, the ministry said. The North's current demand for a $74 minimum wage would represent a 5.18 percent increase.

North Korea withdrew its workers from Kaesong's factories for five months in 2013 during a period of heightened tensions on the Korean Peninsula. South Korean companies at the industrial park complained that the withdrawal caused them about 1 trillion won ($912 million) in losses.

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