SEOUL: North Korea has agreed to extend a deadline to settle a dispute over the payment of wages by South Korean factory owners to workers at the Kaesong joint industrial zone, a businessman said Monday.
The North announced in February that it would unilaterally raise the wages of more than 50,000 North Korean workers employed by 125 South Korean firms operating in Kaesong, just north of the border between the two countries.
South Korea demurred, insisting that under a previous agreement employment conditions in the zone could only be adjusted with the agreement of both sides.
There has been no payment by any South Korean firm, but North Korea agreed to extend the deadline that expired Monday, Yoo Chang-Geun, vice president of an association of factory owners, told Yonhap news agency.
"The North decided to extend the deadline until April 24. None of the South Korean firms have paid the wages," he was quoted as saying.
The Seoul government has urged them not to yield to pressure from North Korea, but South Korean owners have said they could not simply reject the North's demand.
The North's proposal would increase the average monthly sum the South pays for each worker -- including allowances, welfare and overtime -- from $155 to $164.
In 2013 the North effectively closed down the industrial park for five months by withdrawing its workers following a surge in military tensions.
Many South Korean firms operating there, mostly manufacturers of low-priced household goods, are still reeling from financial losses from the shutdown.
Kaesong opened in 2004 and has survived repeated inter-Korean crises that closed down every other avenue of cooperation.
But the North's decision to pull out its workforce in 2013 took most by surprise, especially as it is the North that reaps the greater benefit from Kaesong.
The hard currency wages are kept by the state, which passes on a fraction -- in local currency -- to the workers.
The South's firms get cheap labour on top of preferential loans and tax breaks from the South Korean government, which also effectively underwrites their investment.
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