A group of 14 South Korean businessmen on Wednesday travelled to the Kaesong joint industrial zone for talks with North Korean officials to resolve an escalating row over wages at the park.
Pyongyang last month announced it would raise the basic salary of some 54,000 North Korean workers employed across 125 South Korean firms in the complex as of the end of last year.
The South rejected the idea, citing an existing agreement that any wage rise had to be agreed by a joint committee overseeing the management of the park.
It offered talks to discuss the issue but the North refused, saying it had no need to consult with the South and a "legitimate and normal" right to amend working conditions in Kaesong, which lies in the North just over the border.
"As to the North's unilateral changes to the regulations on wages, we will convey our position without reservations to the North," said Chung Ki-Sup, head of the council of South Korean companies operating at Kaesong.
The companies are in a dilemma as the South Korean government has made it clear that they will be penalised if they yield to pressure from the North.
The North's proposal would increase the average amount the South pays for each worker -- including allowances, welfare and overtime -- from $155 to $164 monthly.
Separately, a row over the launch of anti-Pyongyang leaflets from the South has cast a shadow over the park's fate.
The leaflets are scheduled to be sent by propaganda balloon around Thursday next week to mark the five-year anniversary of the sinking of a South Korean warship in 2010, with the loss of 46 sailors, which the South blamed on the North.
South Korean activists say they will also sneak copies of satirical Hollywood movie "The Interview" across the border, in defiance of North Korea's repeated threats of retaliation through military means.
Kaesong businessmen say the North's anger at the planned launches is behind the row over wages. The South insists the activists have a democratic right to send the leaflets, but has appealed for restraint to avoid overly provoking the North.
In October last year North Korean border guards attempted to shoot down some balloons, triggering a brief exchange of heavy machine-gun fire between the two sides.
Local residents living near the launch sites have complained that the activists are putting their lives at risk by making them potential targets for North Korean retaliation.
Kaesong businessmen apparently downplayed their concerns that there might be a repeat of the 2013 crisis when the North effectively closed down the park for five months following a surge in military tensions.
Many of the firms, manufacturers of low-priced household goods, are still reeling from financial losses from the 2013 shutdown, estimated to be up to $1 billion.
The zone, a rare symbol of cross-border cooperation, had previously been spared the fallout from eruptions in ties between the two Koreas.