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By Yi Whan-woo
The two Koreas have agreed to raise the minimum wage by five percent for North Korean workers at the Gaeseong Industrial Complex (GIC), the government said Tuesday.
The Ministry of Unification said Seoul's Gaesong Industrial District Management Committee and its Pyongyang counterpart struck a deal on Monday to increase the minimum monthly salary for the GIC workers to $73.87, up from $70.35.
The unification ministry oversees the work of the committee, a civic body led by government officials.
The deal will be effective immediately. The workers at the inter-Korean industrial park in Gaeseong, North Korea will receive their July wage, which will be paid this month, accordingly.
Some 53,000 North Koreans are employed by 124 small- and medium-sized South Korean enterprises at the GIC.
"The most pressing issue of the wage cap has been resolved," a unification ministry official said on condition of anonymity during a press briefing. "The move is expected to result in the stable supply of labor and improve business conditions."
The agreement ends the dispute that has been ongoing between the two Koreas since February. Back then, North Korea's Central Special Development Guidance Bureau unilaterally decided to raise the minimum wage by 5.18 percent to $74 starting in March.
Seoul refused to accept Pyongyang's decision, claiming it is a violation of the bilateral agreement that requires civic committees from the two sides to make decisions together on wage-related issues.
The two countries have discussed the wage cap every year before March when the new rate was usually decided for the coming year.
The wage cap has been set at a five percent increase since 2007.
The two countries held several meetings, including a marathon session in July, to settle the dispute but failed to narrow their differences, with Seoul insisting that the wage cap remains at five percent.
Under the agreement on Monday, the North Korean workers will be able to receive "overdue wages" that were supposed to be paid by their employers between March and June.
The deal is likely to raise the total monthly salary a worker earns by more than five percent with other incentives depending on the type of job and years of experience.
"For instance, the incentives could be hazard pay for those who work in hazardous conditions or bonuses for skilled workers," the ministry official explained.
The GIC has served as a major revenue source for cash-strapped North Korea, while South Korea has utilized cheap but skilled North Korean laborers.
Opened in 2004, the GIC is also a symbol of inter-Korean reconciliatory efforts.
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