North and South Korean officials on Thursday opened rare talks over a protracted wage dispute at the jointly operated Kaesong industrial zone in the North.
The two sides have been mired in a months-long row over wages at the Kaesong estate, just 10 kilometres (six miles) over the border in North Korea, with Pyongyang insisting on unilaterally imposing a pay rise for its workers.
Seoul had insisted that any wage change must be a joint decision.
North Korea last week agreed to reopen a joint committee in charge of running the industrial park for the first time in more than a year to discuss the wage dispute.
A five-member South Korean government delegation was received by their North Korean counterparts at a conference hall at the industrial zone.
"I'm happy to see you," said the South's chief delegate Lee Sang-Min, a senior Unification Ministry official who also heads the South's delegation at the joint committee, as he shook hands with his North Korean counterpart Pak Chol-Su.
"Nice to see you," Pak replied, as the pair exchanged what appeared to be forced smiles.
The industrial estate, a joint enterprise between Pyongyang and Seoul, hosts around 120 South Korean firms employing some 53,000 North Korean workers.
The South Korean companies get cheap labour on top of preferential loans and tax breaks from their government, which also effectively underwrites their investment.
Kaesong opened in 2004 and had survived repeated inter-Korean crises that closed off every other avenue of cooperation.
But in 2013, the North effectively shut down the zone for five months by withdrawing its workers following a surge in military tensions. Many firms are still reeling from financial losses from the shutdown.
Kaesong is a key earner for the cash-strapped North. The hard currency wages are kept by the state, which passes on a fraction -- in local currency -- to the workers.
Cross-border tensions have remained high this year due to a series of North Korean ballistic missile tests, nuclear threats and annual US-South Korean military exercise.