North Korea has dropped its demands for hefty wage and rent increases for a joint factory park it runs with the South, an official said yesterday in the latest of a series of gestures to reach out to its foes.
Analysts said the move signaled it wanted to restore business deals with its neighbor after it was hit by UN sanctions that ate into its already depleted coffers and increased pressure to return to nuclear talks.
North Korea has sent the proposal for a wage increase of 5 percent to US$57.88 a month, in line with what it sought in previous years, adding that it wanted the changes to be implemented immediately, South Korea’s Unification Ministry spokeswoman Lee Jong-joo told reporters.
North Korea said in May that it was canceling all wages, rent and tax agreements at the Kaesong factory park in what analysts said was a bid to squeeze more money out of the more than 100 South Korean firms that use cheap labor and land there.
In June, the North demanded a four-fold wage increase for its workers hired by South Korean firms at Kaesong, north of their militarized border.
Tens of million of dollars in wages and other fees paid by the South in hard cash go directly into the coffers of the North’s leaders each year. Critics say the park allows the North to exploit the Kaesong workers for its own benefit with funds generated there helping Pyongyang pay for its various weapons programs.
Operations at the joint factory park had been affected by the North’s demands for massive salary hikes, as South Korean firms balked at the increased cost of operating.
Pyongyang also imposed border crossing restrictions last December, preventing South Korean managers from reaching their factories at Kaesong and impacting the flow of materials to and from the park. Last month the North lifted that blockade.
Frigid relations between the rival Koreas suddenly warmed last month when the North sent its first delegation to the South in nearly two years and its leader, Kim Jong-il, sent his first message to South Korean President Lee Myung-bak.
But warming ties were dealt a blow when the North at the weekend released a surge of water from one of its dams on a river that crosses the border, triggering a flash flood that killed six people in South Korea.
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