SKorea rejects North's demand on factory park

[June 19, 2009]  SEOUL, South Korea (AP) -- South Korea on Friday rejected North Korea's demand for a massive increase in wages and rent at a joint industrial park struggling to stay afloat, leaving the fate of more than 100 companies and 40,000 workers there hanging in balance.

The meeting comes amid tension on the peninsula over the North's missile and nuclear program. Pyongyang last week vowed to bolster its nuclear arsenal and threatened war to protest sanctions imposed by the U.N. following its May 25 nuclear test.

The Korean officials talked for several hours at the industrial park, which houses 105 South Korean factories in the North Korean border town of Kaesong, but no substantial progress was made. The factories employ cheap North Korean labor.

The two sides agreed to meet again on July 2, said Unification Ministry spokesman Chun Hae-sung. North Korean officials, however, said they may ease restrictions on border traffic for South Korean workers in the complex, Chun said.

South Korea's immediate concern is the fate of a citizen, who was detained by North Korea in March while working as a supervisor at a dormitory for South Korean workers at the Kaesong Industrial Complex. It is the last remaining joint project as North has shut down all others amid plummeting relations with the South.

"We urged a quick resolution of security issues, including a quick release of our worker detained more than 80 days," Chun told reporters.

North Korean officials refused to give access to the man and declined to give his whereabouts, said ministry spokeswoman Lee Jong-joo.

At the last two rounds of talks too, Pyongyang had ignored Seoul's demand for the worker's immediate release. It refuses to talk about anything other than its demands.

Chun said the North Korean delegation repeated its previous demand Friday -- a fourfold increase in wages for its 40,000 workers and a 3,000 percent hike in rent for the site.

"We told North Koreans we could not accept their unreasonable demand," Chun, adding that North Korea plans to raise the issue again for the next round of talks in July.

The stand did not come as a surprise as South Korean President Lee Myung-bak had earlier this week described North's demand as "reckless," and called for the immediate release of the South Korean worker.

South Korea proposed that officials from the two sides hold a joint tour of industrial complexes in other countries to see how they work, Chun said. There was no immediate response from the North.

When it was set up in 2004, the Kaesong Industrial Complex was seen as the most potent symbol of reconciliation between the two nations on the divided peninsula. It combined the South's capital and technology with the North's cheap labor.

But relations between the two countries have deteriorated with the installation of Lee's hard-line, heavily pro-U.S. government in Seoul last year and Pyongyang's refusal to give up its nuclear and missile programs.

The North has cut off ties with the South and halted all key joint projects except the Kaesong complex. The border restrictions it imposed often left hundreds of South Koreans stranded in Kaesong for days.

One of the 106 South Korean companies at the park has pulled out, citing security concerns and reduced business due to the tension.

[Associated Press; By KWANG-TAE KIM]

Associated Press writer Kelly Olsen in Seoul contributed to this report.

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