Tag: Kaesong Industrial Complex

Jung Ki-sup, chief of the association of 124 South Korean firms at the Kaesong Industrial Complex in the North’s border city, speaks to reporters after meeting with lawmakers of the ruling Saenuri Party at the National Assembly in Seoul on Feb. 12, 2016. The Kaesong-based firms are expected to see huge losses, as the North expelled all South Korean nationals from the complex the previous day and froze the factory assets of South Korean firms in retaliation for Seoul’s decision to shut down the complex. (Yonhap)

Our analysis of South Korea's decision to shut down #Kaesong over North Korea provocations – https://t.co/eOEyLlEckw pic.twitter.com/tx6JY3WQue

— KEI (@KoreaEconInst) February 11, 2016

This has been something I have been saying for years that the Kaesong Industrial Complex is a cash cow for the Kim regime which further helps them build the very weapons they use to threaten South Korea and the international community with:

South Korea said Wednesday it has decided to “completely” shut down a joint industrial complex in North Korea in response to the North’s recent nuclear test and long-range rocket launch.

The Unification Ministry announced that it will suspend the operation of the Kaesong Industrial Complex in the North’s border city of the same name, the last remaining symbol of inter-Korean reconciliation.

Seoul’s move is part of its “bone-numbing” measures against North Korea’s nuclear test on Jan. 6 and its long-range missile launch earlier this week.

On Sunday, the North launched a long-range rocket carrying a satellite, which Seoul and Washington view as a cover for a banned test of intercontinental ballistic technology.

“Despite our efforts to support the Kaesong complex, the factory zone is seen as being used for North Korea’s development of nuclear weapons and long-range missiles,” Unification Minister Hong Yong-pyo said in a press briefing. “We’ve decided to halt the operation of the Kaesong complex to prevent South Korean money from being funneled into the North’s nuke and missile developments and to protect our companies.”  [Yonhap]

You can read the rest at the link, but I think the Park administration has left Kaesong open as something of a bargaining chip to make the North Koreans behave.  This clearly has not worked and finally the Park administration has had enough and shut it down.

Seoul should pull the plug on Kaesong. It's failed in its objective to induce NK reform and behavior moderation https://t.co/UHdYaKIQdg

— Bruce Klingner (@BruceKlingner) January 18, 2016

Instead of trying to use claims of setting up a Social Security system for the Kaesong workers, the North Korean negotiators now appear to be trying to make use of the minimum wage fight in the US and claim it is their sovereign right to wage the minimum wage for Kaesong workers:

The two Koreas are holding talks to settle the dispute over the wages of North Korean workers employed at the Gaeseong Industrial Complex in the North.

The sixth round of talks of a joint inter-Korean committee in charge of running the complex is under way at the complex in the North Korean border city.

During a plenary session Thursday morning, the two Koreas exchanged opinions on the wage dispute, issues concerning border passage, customs and communications as well as improving working conditions at the factory zone.

In the afternoon, Lee Sang-min from the Unification Ministry, heading the talks, and his North Korean counterpart Pak Chol-su, a vice director of the North’s special economic zone development department, held two chief delegates’ meetings and discussed the wage concern.

A Unification Ministry official in Seoul said the mood in the talks was not bad, but results of the meeting are not yet known.

Before the morning session began Thursday, Lee welcomed news of Pak expressing hope that the day’s meeting would serve as “welcome rain” for cross-border relations.

The North Korean official went on to metaphorically say that recent downpours have in fact considerably helped harvest conditions in the North.

He said that he believes the latest talks can produce good results just like a long awaited rain after a drought for business people hoping for the success of the complex and all Koreans longing to see inter-Korean relations improve.

The Thursday talks are known to have particularly focused on the contentious issue of revising labor regulations including a five percent cap on minimum wage growth.

North Korea contends setting the minimum wage is a sovereign right while the South calls for an inter-Korean agreement on the issue per the previous rule.  [KBS World Radio]

You can read more at the link.

These workers at the Kaesong Industrial Complex only make $70 a month with most of it going to the Kim regime. I don’t know what to call this other than near slave labor:

South Korean firms in an inter-Korean factory park in North Korea plan to pay wages to their North Korean employees this week, a government official said Monday.
The move came days after Pyongyang accepted Seoul’s tentative offer of wage payments for North Korean workers at the factory park in North Korea’s border city of Kaesong at a previously agreed level until separate consultations are held.
The deal on Friday would allow South Korean firms to pay the wage based on the US$70.35 per month that was originally set. But it called for the 124 South Korean firms to provide retroactive pay based on the outcome of separate consultations.
The official said North Korea demanded that South Korean firms in Kaesong pay March and April wages by the end of this month. The official asked not to be identified, citing policy.
The sides have yet to produce a deal over the more sensitive issue of a wage cap, which has been set at 5 percent per year.

In February, North Korea unilaterally decided to hike the minimum wage by 5.18 percent to US$74 per month for about 53,000 North Korean workers in the factory park.  [Yonhap]

Is this the first time that someone from the UN has advocated for the use of near slave labor?:

U.N. Secretary-General Ban Ki-moon said Tuesday he will visit the inter-Korean industrial complex in North Korea’s border city of Kaesong this week to help ease inter-Korean tensions.

“I reiterate my willingness to do whatever it takes to contribute to improving inter-Korean relations and promoting reconciliation and stability on the Korean Peninsula,” Ban said during a press conference at the World Education Forum in Songdo, west of Seoul.

On Thursday, Ban, a former South Korean foreign minister, will be the first U.N. chief to visit the complex, which has been symbolic of inter-Korean reconciliation since its launch in 2004. He will also be the first U.N. chief to visit North Korea in more than 20 years.

“The Kaesong project is a win-win model for both Koreas,” he said. “It symbolizes a good way to tap the advantages of the Koreas in a complementary manner.”  [Yonhap]

You can read more at the link.

It appears that the South Koreans are giving into the unilateral wage hikes the North Koreans having been demanding to provide so called “Social Security” to their workers at the Kaesong Industrial Complex:

As the North has rejected formal talks, the South is seeking a resolution through the Kaesong Industrial District Management Committee, a quasi-government organization, according to a senior unification ministry official.

“We are positively considering consultations between the committee and the (North’s) Central Special Development Guidance Bureau,” he told reporters on background.

The committee is ostensibly a North Korean organ but headed by South Korean government officials. Kim Nam-sik, South Korea’s former vice unification minister, chairs the committee.

The ministry official said it’s urgent to resolve the wage problem as 124 South Korean firms there will begin to pay March’s wages to around 53,000 North Korean employees on April 10.

“Once the wage issue is resolved, we can discuss the problem of the general labor rules,” he said.

His comments suggested the possibility of the South accepting the North’s decision on the 5.18-percent wage hike in a bid to buy time for dialogue on how to operate the Kaesong zone, which is susceptible to Pyongyang’s unpredictable measures.  [Yonhap]

You can read more at the link.

You have to hand it to the North Koreans for being creative here and showing how to take money from people and then claim it to be a Social Security program like we do here in the US:

North Korea has notified South Korea of its unilateral decision to raise the minimum wage for its workers at the Kaesong Industrial Complex by 5.18 percent, the unification ministry said Thursday.

In a fax message sent Tuesday, the North said it would increase the minimum wage from $70.35 to $74 starting on March 1, a ministry official told reporters.

In addition, the North announced that it would collect 15 percent of their basic wage plus overtime payments as “social security,” he said. Currently, the South’s firms pay 15 percent of the basic wage alone.

The North Korean workers’ average wage amounted to $141.4 per month in 2014, according to the ministry’s data.

Under Pyongyang’s plan, South Korean firms will have to pay $164 on average for a North Korean worker a month, up 5.53 percent from the current $155, said the official.

He stressed that the South’s government can’t accept the North’s move.

“The two sides are supposed to set wages for workers at the complex and other working conditions through mutual consultations,” he said. “The government will advise our firms to pay the current level of wages until the issue is settled through consultations between the related authorities of the two sides.”  [Yonhap]

You can read more at the link.

From the North’s perspective why would they want to globalize the Kaesong Industrial Complex?  It has worked as a great bargaining chip for them over the years to get what they want from the South Koreans:

South Korea called on North Korea to be more cooperative in luring foreign investors to their joint industrial complex in the North on Monday, the eve of the first anniversary of its reopening.

Seoul’s unification ministry said the operation of the Kaesong Industrial Complex (KIC) has been almost fully normalized despite a six-month hiatus from March last year.

The North, however, has maintained a lukewarm attitude toward agreed-upon working-level meetings to discuss ways to develop the facilities, where 125 South Korean firms employ more than 52,000 North Korean workers, according to the ministry.

“The globalization of the KIC has made little progress due to North Korea’s uncooperative stance,” it said in a press release. “North Korea will have to do what it should do for dialogue (on the future of the KIC) and its globalization.”  [Yonhap]

You can read more at the link, but to the South Koreans globalizing Kaesong likely means getting as many Chinese companies as possible in there to make it harder for the North Koreans to shut down again.