Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Free subway rides for elderly emerge as headache for Seoul mayor
Two commuters wait to board a subway train at Seoul Station. Korea Times file
By Lee Yeon-woo
Seoul City at odds with finance ministry over free subway fares
By Lee Yeon-woo
Around 5 p.m., Tuesday, when the waiting crowd was busy trying to squeeze into the subway train at Ewha Womans University Station on Seoul Metro Line 2, a 73-year-old senior citizen who asked to be identified only by her first name Hang-soon stood up from a bench and pushed her mini handcart onto the train.
She was heading home from a visit to her friend at an elderly social gathering. She said the free subway ride is important for traveling to meet her friends. It keeps her energetic and makes her feel connected to the world.
Like other seniors, she does not have to pay a single penny to get there.
Hang-soon is one of the nation's 9 million senior citizens who can use the subway for free. In Korea, everyone aged 65 or older is eligible for free subway rides.
She said she is truly grateful for the policy. “It's a good country to live in. The government takes care of seniors like me, every place (in Seoul) is near a subway station and thanks to the free subway I can go anywhere I want.”
The free subway fare for senior citizens, which was introduced in 1984, is one of the rare perks only seniors can enjoy in this aging society. It helps reduce rates of suicide and depression, as well as medical fees by keeping senior citizens active, according to the Korea Transport Institution's research in 2015.
However, transporting elderly riders for free doesn't give only advantages.
It has recently emerged as a headache for heads of big city governments, especially Seoul where most of the nation's population is concentrated, as the deficits of Seoul Metro are snowballing to a dangerous new level.
“Since the start of the COVID-19 pandemic, Seoul Metro has faced a deficit of 1 trillion won ($ 8.1 billion) annually, and the seniors' free rides account for 30 percent of the deficit. Before COVID-19 it took 60 percent,” Seoul Mayor Oh Se-hoon wrote on Facebook, Tuesday. “In the meantime, Seoul Metro has endured by issuing corporate bonds, but now it has reached its upper limit. If it was a private company, it would have already gone bankrupt.”
Seoul Mayor Oh Se-hoon speaks during a press conference held at Seoul City Hall, Monday. Yonhap
Oh added that the Ministry of Economy and Finance should actively step up on the issue to reduce the increasing burden Seoul Metropolitan Government is shouldering. To address the deficit, the city is set to raise subway fares by 300 won ($ 0.24) to 1,550 won ($1.26) from the current 1,250 won as early as April.
Oh's social media post is his way of ratcheting up pressure on the finance ministry to share the burden.
The free subway fare policy has pitted the city against the Ministry of Economy and Finance.
A day before, Oh said during a press conference that the finance ministry should “change its position” to minimize the rate hike. He cited the finance ministry's refusal to make budgetary allocations last December for its public service obligation (PSO) compensation, in order to make up for the deficit caused by free subway rides.
The finance ministry commented that it's difficult to use public money to benefit only a specific group of people. For instance, most seniors who have no choice but to ride the bus or who reside in rural areas do not benefit from the policy.
“The free ride policy has originated from a previous president's recommendation, not from the city government level,” a city official told The Korea Times. “For this reason, Oh meant that the central government should step up and reimburse a certain amount of the deficit.”
It's also difficult for the city government to alter the policy fundamentally because senior citizens wield immense voting power. Households with elderly members aged 65 and over account for 22.8 percent as of 2020, and will increase to 49.6 percent by 2047, according to Statistics Korea.
“This year, people born in 1958, the baby boomers, turn 65 and are eligible for free rides. The deficit will be even more explosive. The finance ministry hesitates to respond, believing its responsibility will increase widely if the central government begins to support the city government's policy,” said Yu Jeong-whon, a professor at Ajou University's Transportation System Engineering Department. “When it comes to public transportation, it's extremely unsustainable to hand over every decision-making process to local government.”
He accused the central government of turning a deaf ear to his repeated calls to share the burden.
“There can be many ways for improvement,” he said. “We can discuss adjusting the free-ride age, leading management efficiency and many more. But there's no room to talk to reach a national consensus. The issue needs to be discussed desperately.”