Koreas divided over joint industrial estate

North Korea has demanded a huge pay rise for its workers at a South Korean-funded joint industrial estate plus a payment of 500 million dollars in rent, Seoul's Yonhap news agency has said.

The agency said the communist state made the demands when officials from the two sides met at Kaesong, just north of the border, to discuss the estate's future.

Yonhap said the North called for salaries to be increased to 300 dollars a month compared to the current payment levels of around 75 dollars.

It also called for Hyundai Asan and the Korea Land Corp, the South Korean entities which jointly developed Kaesong, to pay a total of 500 million dollars for renting land there.

Seoul's unification ministry, which handles cross-border ties, could not immediately confirm the report.

News of the demands follows talks between the two Koreas on the future of their last major remaining joint venture. The talks started at 10.40 am (0140 GMT) at the Seoul-funded industrial estate.

Government officials from the two sides met in April for the first time in more than a year. But the talks broke down after 22 minutes, with the North also demanding pay rises for its workers and refusing to discuss a detained South Korean manager from the joint industrial estate who has been held since March 30.

Last month Pyongyang announced it had scrapped wage and rent agreements at the estate. It told South Korean firms to pack up and leave if they cannot accept pay rises and other new terms.

The estate opened in December 2004 as a symbol of reconciliation but has often been buffeted by political disputes.

Communist North Korea, which is bitterly at odds with South Korea's conservative government, has in the past expelled South Korean managers from Kaesong and restricted access to the estate.

On Tuesday a clothing company announced it would become the first firm to quit the estate, largely because of the detention issue.

Kaesong is the last significant joint project between the communist North and capitalist South. More than 40,000 North Koreans work for 106 South Korean firms producing items such as garments, kitchenware and watches.

But companies face mounting uncertainty and a slump in business amid tensions over the North's nuclear and missile development.

Their output fell 6.6 percent from a year earlier to 74.5 million dollars in the first four months of this year