South Korean companies in Kaesong had earlier suggested staff could be reluctant to pull out, because they wanted to protect their assets from seizure.

In 2011 North Korea said it seized assets from Mount Kumgang, a mothballed tourism site run by the two countries.

South Korea called for talks on the issue on Thursday, asking for a response by noon on Friday. Pyongyang rejected the offer, saying the South Korean "ultimatum" risked exacerbating tensions.

'Litmus-test'

The Kaesong complex is the biggest contributor to inter-Korean trade and provides the North with much-needed hard currency.

The stoppage has also taken a heavy toll on South Korean firms, Yonhap news agency quoted South Korean President Park Geun-hye as saying.

The zone is seen as a litmus-test of relations between the two countries, and analysts consider such anextended shut-down to be a considerable setback.

In 2009 North Korean authorities briefly shut off entry to Kaesong industrial park after US-South Korean military drills, leaving hundreds of South Korean workers effectively trapped.

The current Kaesong ructions follow weeks of strong rhetoric from North Korea, which has been angered by tightened UN sanctions imposed after its 12 February nuclear test and by current joint US-South Korean military drills.

The past two months have seen unusually high tensions on the Peninsula, and while the rhetoric on both sides has softened slightly, the situation remains unresolved, the BBC's Lucy Williamson in Seoul reports.