( CNN ) A salary dispute between North and South Korea has sent jitters through factory owners operating at an industrial complex that is supposed to be a symbol of cooperation for the divided Korean peninsula . The disagreement started in late February , when the North Korean government demanded an increase of around $ 8.60 a month for North Korean employees working in the Kaesong Industrial Complex . South Korea is working on a response to the demands , leaving factory owners worried about the threat of a factory shutdown . `` I 'm already nervous about the situation because of the traumatic experience in 2013 when the North closed down the complex , '' said Yoo Chang-geun , the South Korean head of an automobile parts manufacturer that employs 400 North Koreans in Kaesong . Yoo 's company , SJ Tech , operates out of Kaesong , which is just north of the Demilitarized Zone in North Korean territory . He was referring to North Korea 's monthslong closure of Kaesong in 2013 , during a period of heightened tension on the peninsula . About 125 South Korean companies operate out of Kaesong , employing more than 50,000 North Korean workers . An official from the South Korean government 's Unification Ministry , who according to policy spoke to CNN on condition of anonymity , says companies at Kaesong pay their North Korean workers an average of $ 155.50 a month . North Korea is demanding an increase of roughly 5.5 % , to an equivalent $ 164.10 a month . The South Korean government argues that the salary hike is a breach of an existing agreement for the industrial park , which first opened in 2004 . The official called the North 's request a `` one-sided demand . '' The official did not rule out the possibility that penalties could be imposed on South Korean companies if they individually agree to raise employee salaries . Manufacturers in Kaesong rely on the government in Seoul to represent them in negotiations with Pyongyang . `` It feels like we 're entering a very difficult phase where innocent corporations are being beaten up by political fights between the North and South , '' Kim Seo-Jin , the director of Corporate Association of the Kaesong Industrial Complex , said Wednesday . Experts say this is n't the first time the North and South have butted heads over employee salaries in Kaesong . The industrial park was established as a symbol of cooperation at a time when a previous government in South Korea was pursuing a `` Sunshine Policy '' of friendship with its northern rival . South Korean companies benefited from the extremely low cost of North Korean labor . Meanwhile , North Korea gained a valuable stream of hard currency revenue by appropriating an undisclosed amount of salary from its citizens working in Kaesong . South Korean employers also made a practice of giving small food bonuses to some hungry employees . For a time , this came in the form of `` Choco Pies , '' a packaged South Korean dessert . The snacks reportedly became highly-prized items on the black market in the communist North 's rigidly controlled economy . Eventually , employers transitioned to giving workers instant noodles , as one former Kaesong factory owner told CNN in 2014 , `` in order to provide a more substantial snack . '' `` The whole project is built with an understanding that North Korean wages should and will continue to rise , '' says John Delury , associate professor at Yonsei University 's graduate school of international studies in Seoul . But one factory owner said the communist regime 's most recent approach to the salaries is problematic . `` The amount of the pay raise demanded this time is small , '' said SJ Tech 's Yoo Chang-geun . `` But having this kind of precedent may lead to losing control of the operation in the complex . '' Experts say Seoul and Pyongyang 's approach to the Kaesong salary dispute will serve as an important barometer for the direction of future relations between the rival governments . `` Kaesong is the last living legacy of the Sunshine Policy , '' says professor Delury of Yeonsei University . `` If something like wage disputes lead to the shutdown or freezing of Kaesong , that would be a major blow . ''
The disagreement started in late February . South Korea 's demanded a pay increase ; North Korea working on a response .