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Wednesday, May 25, 2011     GET REAL

Tensions high between Koreas, but capitalism
a unifying force at industrial hub on border

By Lee Jong-Heon, special from

SEOUL — Despite heightened tensions with South Korea, Pyongyang has deployed additional workers to the industrial complex in its border city of Kaesong where suspect capitalist enterprises from South of the demilitarized zone nevertheless offer workers the wages needed by a cash-hungry regime.


A general view of the inter-Korean industrial complex of Kaesong is shown from a South Korean observation tower in Paju, near the Demilitarized Zone separating the two Koreas. Jung Yeon-Je/AFP/Getty Images
A total of 46,420 North Koreans are working at the industrial park just north of the heavily fortified border as of the end of last February, up 11 percent from 42,415 a year before, according to Seoul's Unification Ministry that handles inter-Korean affairs.

"This represents that 334 workers have been added every month for the past year," a ministry official said. The North Koreans are hired by 121 South Korean firms operating at the industrial park. To educate the additional North Korean workers, about 650 South Korean company officials are currently staying at the complex, up from less than 500 months ago.

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The recent increase came despite South Korea having frozen investment in the complex and elsewhere in the North following the North's deadly torpedo attack on a South Korean warship in May last year.

The North furiously responded to Seoul's punitive measures, warning of a nuclear war on the peninsula and promising to be "merciless." Ironically, however, the North has kept sending workers to the Kaesong complex regarded as a symbol of cross-border reconciliation and cooperation.

"This means the North wants to keep the complex afloat regardless of tensions across the border," the ministry official said, calling it the "money-making" project for cash-strapped Pyongyang.

The Kaesong complex is the only remaining source of cash from the South following the suspension of tour programs to Kaesong city and Mount Kumgang have been suspended following the 2008 incident in which a female South Korean tourist was shot dead after straying into an off-limits military zone near the mountain resort.

South Korean firms at the complex currently pay about $100 to each North Korean employee per month for wage and insurance fees, or over $4.6 million for 46,420 workers a month. South Korea transfers the U.S. dollars to the North's authorities, which pay its workers in the North Korean currency or in coupons for food and daily necessities.

"The North Korean regime gets nearly $60 million in cash a year from the Kaesong project, which prompted it to send more workers to earn more hard currency," the official said. The figure is significant given the North's exports that stood at $1 billion in 2009.

For their part, the South Korea firms, which re-located their factories to the Kaesong complex to benefit from cheap labor and land, also want more North Korean workers to increase production.

Unification Ministry officials said the Kaesong complex is instilling a sense of capitalism into North Korean workers, and eventually spreading market economy in the reclusive North.

"North Koreans in the complex want to work overtime to get extra bonuses, unthinkable elsewhere in the North. They are learning about the capitalist economy," an official said.

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