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North Korea reportedly ordered accounting officers at South Korean tenant companies at the Kaesong Industrial Complex to calculate March pay to reflect a recently declared wage hike.

The reports come after the South Korean government sent an Apr. 2 notice instructing business owners to only pay wages as per the existing inter-Korean agreement. There could now be a dispute between the two sides over the wage hike erupting on the ground in Kaesong.

“Our understanding is that North Korea’s Central Special Development Guidance Bureau delivered instructions to accounting officers by way of its North Korea chief worker at the different tenant companies, telling them to calculate the minimum wage and social insurance premiums by the standards set by the North,” explained a Ministry of Unification official on Apr. 3.

Accounting duties at the South Korean Kaesong tenant companies are conducted by North Korean workers. In late February, North Korea unilaterally announced a 5.18% increase in the minimum wage payable to workers, raising it from US$70.35 to US$74 a month.

The South Korean tenant companies are currently planning to calculate their wages based on Apr. 2 instructions from Seoul to pay only the currently agreed-upon minimum wage and premiums. The difference means there could be frictions with North Korean workers ahead.

Settlement of March wages begins around Apr. 5, with a payment date around Apr. 10.

“Even if the accounting staff do calculate wages by the North Korean standard, it won’t actually be paid unless the local corporation head signs off on it,” explained a Ministry of Unification source.

Seoul currently plans to propose a discussion of the wage hike to the North Korean guidance bureau early next week through its Kaesong Industrial District Management Committee.

But the likelihood of the discussion happening is unclear, with Pyongyang maintaining that the issue is its own matter to decide rather than something to discuss with Seoul.

By Kim Ji-hoon, staff reporter

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