Yemen's president issued a decree on Wednesday reinstating around 800 senior army officers and police who had been retired after the 1994 civil war.
The official Saba news agency said President Abdrabuh Mansur Hadi announced four decrees restoring almost 600 officers, including generals, and more than 200 officers in the ranks of the interior ministry and police.
The measure, applied retroactively on wages and pensions, had been eagerly awaited in southern Yemen where separatist sentiment has remained strong since unification in 1990.
It comes amid an ongoing national dialogue on a new Yemeni constitution ahead of elections in February, after a political transition following the 2011 uprising that forced out longtime president Ali Abdullah Saleh.
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Among the demands of the southerners is the compensation of around 70,000 soldiers and officials dismissed or retired early after the north crushed a southern bid for independence in 1994.
In the national dialogue, southern delegates are demanding a federal state consisting of north and south Yemen, while northerners are proposing more than two entities, according to sources close to the talks.
The minister said he hoped the dialogue would end as scheduled on September 18, adding that if necessary the talks would be extended by one week.
The dialogue, part of a UN-brokered power transfer deal, is aimed at drafting a new constitution and preparing for the February 2014 elections.