South Korea businesses visit North Korea industrial park to protest against wage rise

PAJU, South Korea (REUTERS) - South Koreans who operate factories in an industrial complex in North Korea went to the park on Wednesday to protest against a North Korean decision to increase wages paid to North Korean workers there.

The Kaesong industrial zone, jointly by the two Koreas, is just on the North Korean side of their heavily fortified border. It is the last remaining symbol of economic cooperation between the rival states.

North Korea shut down the complex for five months in 2013, during a period of diplomatic tension, and dialogue between the two sides on its operations have been patchy for years.

"The unilateral change of labour rules is a problem," Chung Ki Sup, the leader of a council leader of South Korean companies that have operations in the zone, told reporters, referring to the wage increase. "But that can be easily resolved when dialogue resumes," he said before crossing the border.

South Korea has 125 companies in the zone, most of them small- and medium-sized firms, employing 53,000 relatively cheap North Korean workers.

The complex has operated for a decade but there have been persistent questions about the viability of a project that is subject to political tension between the two Koreas, which remain technically at war.

In September, the North introduced a regulation allowing it to detain South Korean workers if their companies failed to live up to their contracts, if confiscation of property did not cover potential losses.

A South Korean business representative said the rule could hurt investment.

The wage increase and lack of dialogue about it are likely to compound such doubts.

The North Korean agency that supervises the complex demanded an increase of about US$3.65 (S$5.07) in the minimum monthly wage for its workers, to US$74 a month.

South Korea has rejected the demand, saying the unilateral increase violated agreements. North Korea has said it has the sovereign right to raise wages at Kaesong.

Chung said he believed the stalemate over Kaesong was linked to South Korea's refusal to ban activist groups from launching into North Korea balloons carrying leaflets critical of the North Korean government. The balloons infuriate North Korea.