N. Korea demands steep wage, rent hikes from South at joint venture

(ATTN: RECASTS headline, lead, UPDATES throughout, ADDS analysis)
By Kim Hyun
SEOUL, June 11 (Yonhap) -- North Korea demanded a four-fold increase in wages for
its workers and a 30-fold raise in rent at a South Korean-run industrial park
during talks Thursday, officials said, casting darker shadows on the future of
the last-remaining inter-Korean venture.

However, Pyongyang did leave room for negotiation, Unification Ministry officials
said, as the two sides agreed to meet again on June 19.
"Judging from the amount of the money it is asking, North Korea may seem like it
is telling (South Korean firms) to leave," Kim Young-tak, senior representative
for inter-Korean dialogue at the Unification Ministry, said in a briefing after
returning from the talks held at the North's border town of Kaesong.
"But I can tell you for sure that there was no such word," Kim, who led the
South's 14-member delegation, said. "We believe the two sides will reach an
agreement through a long negotiating process starting today."
The rare talks came amid growing tensions on the peninsula. North Korea has
warned of naval clashes on the Yellow Sea border with the South and was
sharpening its confrontation with the U.N. Security Council, which is expected to
slap new financial and diplomatic sanctions on Pyongyang for its recent nuclear
test.
Further complicating the situation, North Korea has been holding a South Korean
worker since March, accusing him of criticizing its political system.
North Korea still gave no promise about the Hyundai Asan employee, identified
only by his surname Yu, only saying he is "doing well without any problem," Kim
explained.
"Our government will put priority on the early release of our worker and safety
issues as we proceed with the negotiations with the North," he said.
Pyongyang demanded South Korean firms raise their average monthly wages for North
Korean workers to US$300 from the current $70-$80 and guarantee an annual wage
increase of 10-20 percent from the current 5 percent, Seoul officials said. South
Korean firms paid about $26 million in wages to the North Korean government last
year.
North Korea also told the South to increase the rent for the joint park to $500
million. South Korean developers, Hyundai Asan and the state-run Korea Land
Corp., paid $16 million when the park opened in 2004 for their right to develop
the joint park over the next 50 years.
North Korean state media said such demands aim to establish a "normal footing" on
the joint park.
Inter-Korean relations "have reached the phase of catastrophe," and the joint
venture "was thrown into a serious crisis," the Korean Central News Agency quoted
the North Korean delegation to the talks as saying.
North Korea has "no reason for keeping any longer the preferential measures" for
South Korea while historic summit accords that gave birth to the park are
"totally negated" by the Seoul government, it said.
The Kaesong venture, just an hour's drive from Seoul, is the last surviving
inter-Korean economic project to come out of the 2000 inter-Korean summit. Other
joint ventures, including booming tour projects to North Korean scenic resorts,
were suspended last year as political relations unraveled under the conservative
Lee Myung-bak government in Seoul.
The park hosts 106 South Korean firms producing clothing, kitchenware, electronic
equipment and other labor-intensive goods. More than 40,000 North Koreans work
there.
North Korea's new demands deepened already serious concerns about the joint park.
A fur clothing company, Skin Net, said this week it will close its factory in
Kaesong by the end of this month, the first withdrawal by a South Korean firm
from the joint venture.
Ok Sung-seok, chief of Nine Mode Co., a clothing company with about 300 North
Korean workers, said he believes the $300 wage demand will not be the end result,
and that North Korea will back down in the next talks.
"North Korea was not saying, 'take it or leave it.' It set up the next talks, and
I believe there's room for negotiation, and there will be an agreement that we
can accept," Ok said.
The firms will meet on Friday to decide on their position.
Kim Yong-hyun, a North Korean studies professor at Dongguk University, said North
Korea is forcing the South to pay more or give up the joint venture. He said
Pyongyang cannot officially push for the closing of the joint park because it was
initiated by its leader, Kim Jong-il.
"North Korea wants to say the ball is now in the Lee Myung-bak government's
court," he said.
"By setting new talks, the North is saying, 'We're doing all we can. It's your
responsibility if things go bad.'"
hkim@yna.co.kr
(END)