Authorities from both countries agreed Friday to raise the minimum monthly wage to $67, up five percent from last year, said Seoul's unification ministry that handles cross-border affairs.
"The minimum wage has been raised five percent every year since 2007 in line with labour regulations," a spokesman told AFP.
The industrial estate established in 2004 as a symbol of cross-border cooperation has remained operating despite rising cross-border tensions in recent years.
Some 52,292 North Koreans work at 123 small labour-intensive South Korean plants at Kaesong just north of the tense border, producing clothes, utensils, watches and other items.
Last year production was worth a record $400 million compared to $15 million in 2005.
South Korea cut most trade with the North in May 2010 after accusing it of sinking a warship but exempted Kaesong. Supporters of the project say it serves to educate the communist state about the free-market system.
Wages are however paid to a North Korean state organisation, which returns a percentage to the employees plus food and other perks.