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North, South Korea reach deal in Kaesong wage dispute

The agreement covers social welfare for North Korean factory workers in Kaesong and the wage hike is closer to 8 percent after accounting for benefits.

By Elizabeth Shim
North, South Korea reach deal in Kaesong wage dispute
Productivity at the Kaesong Industrial Complex in North Korea has soared dramatically despite the wage dispute. In a new deal reached Monday, workers are to receive benefits as well as a 5 percent increase in their salaries. File photo by Yonhap

SEOUL, Aug. 18 (UPI) -- North and South Korea agreed Monday to raise the minimum wage 5 percent at a jointly operated industrial park, but the wage hike is closer to 8 percent after benefits.

The agreement ends a nine-month standoff between Seoul and Pyongyang that began in November when North Korea unilaterally changed its minimum wage laws, South Korean newspaper Kyunghyang Sinmun reported.

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North Korea demanded a 5.18 percent increase in the monthly minimum wage to $73.87, but Seoul disputed the changes made without first consulting the group of 124 South Korean firms operating factories at the Kaesong Industrial Complex, Yonhap reported.

"The most pressing issue of the wage cap has been resolved though there is still a long way to go. But the move is expected to support the stable supply of labor and improve business conditions," an unnamed South Korean official told Yonhap after the deal was reached.

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The agreement also covers social welfare for North Korean factory workers in Kaesong. Taken together, the payment of workers' health insurance and other benefits indicates total income is to increase between 8 and 10 percent.

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Coverage for North Korean workers is to include provisions for work-related injuries, death insurance and unemployment benefits.

Workers also are to be compensated for hours worked overtime and for holidays at a rate that is between 50 to 100 percent of regular hours worked, according to South Korean officials.

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Ongoing tensions between the two sides have affected business operations in Kaesong but productivity at the complex has soared dramatically despite the wage dispute.

From January to April, production value was estimated to have reached $186 million, up 25 percent from $148 million from the same period in 2014.

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