A group of South Korean businesspeople traveled to the Kaesong joint industrial zone in North Korea yesterday to address a damaging wage dispute hanging over their companies there.
The North announced last month that it would unilaterally raise the wages of the approximately 54,000 North Korean workers employed at the 125 South Korean firms operating in Kaesong.
South Korea demurred, insisting that employment conditions in the zone could only be adjusted with the agreement of both sides.
Photo: AFP
With the North’s unilateral proposal supposed to take effect on Friday, the South Korean owners are concerned their company managers might come under intense pressure to comply.
The 17-member delegation undertaking the one-day trip yesterday was led by Chung Ki-sup, who heads the council of South Korean companies operating in Kaesong.
“We are going to Kaesong with hopes to settle the wage issue through dialogue,” Chung told journalists before crossing the border.
“We’re in a dilemma. As we operate plants in North Korea, we cannot simply reject the North’s demand, but we also have to follow the South Korean government guidelines,” he said.
The South Korean Ministry of Unification has sent an official letter to the South Korean companies in Kaesong, urging them not to yield to pressure from the North on the wage issue.
Chung’s delegation has also asked for a meeting with North Korean government authorities.
Until now, Pyongyang has rejected Seoul’s requests for official talks on the dispute, saying it has no need to consult over its “legitimate” right to amend working conditions in Kaesong.
The North’s proposal would increase the average monthly sum the South pays for each worker — including allowances, welfare and overtime — from US$155 to US$164.
The South has cited an existing agreement that any wage rise has to be agreed by a joint committee overseeing the management of the park, which lies about 10km on the North side of the border.
In 2013, the North effectively closed down the industrial park for five months by withdrawing its workers following a surge in military tensions.
Many of the South Korean firms operating there, mostly manufacturers of low-priced household goods, are still reeling from financial losses from the shutdown.
Born out of the “sunshine” reconciliation policy initiated in the late 1990s by then-South Korean president Kim Dae-jung, Kaesong opened in 2004 and proved remarkably resilient, riding out repeated inter-Korean crises that closed down every other facet of cooperation.
The North’s decision to pull out its workforce in 2013 took most by surprise, especially as it was the North that reaped the greatest financial benefit from its operations.
The hard currency wages paid by the South Korean firms in Kaesong are kept by the state, which passes on a fraction — in local currency — to the actual workers.
The South Korean businesses get cheap, Korean-language labor, as well as preferential loans and tax breaks from the South Korean government, which also effectively underwrites their investment.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San