[Initial Report] No Solution for Seoul Subway's 'Mountains of Deficit'?

On the 13th, citizens wearing masks are passing through the ticket gates at Sindorim Station in Guro-gu, Seoul. Starting from this day, the Seoul Metropolitan Government will restrict passengers who are not wearing masks from boarding when the subway congestion reaches the "congestion stage." For passengers who do not have masks, dental masks can be purchased at market prices from vending machines (448 locations), integrated sales points (118 locations), and convenience stores (157 locations) throughout all stations. Photo by Kim Hyun-min kimhyun81@

"Whether by raising fares, reducing the proportion of free rides, or having the government compensate for losses, measures are needed. But with the COVID-19 pandemic and the by-election issues overlapping, no one is able to take action. The concern is that this might eventually lead to a serious accident."

Seoul Metro, which had warned that it would soon have to worry about paying employees' salaries due to increasing deficits, has ultimately requested an emergency short-term loan of 280 billion won from the Seoul Metropolitan Government. Seoul Metro has been operating at a chronic deficit, incurring losses of around 500 billion won annually. This year, due to the impact of COVID-19 causing a more than 20% drop in passengers and increased quarantine costs, a record net loss of up to 1 trillion won was anticipated. Although emergency management measures have been implemented, such as reducing employee welfare benefits and scaling back next year's hiring plans, there is still no solution in sight for the 540 billion won in corporate bonds (CP) maturing all at once at the end of the year.

In fact, the deficit problem of Seoul's subway system is not new. The free ride system for seniors aged 65 and over, often cited as the main cause, is actually based on the concept of "expected revenue from fares not collected," and carrying more seniors does not directly increase the subway's deficit. Since labor and electricity costs for operating and managing the subway continue to rise, the idea is to charge seniors fares to reduce the deficit. However, as the senior population rapidly increases, the proportion of free riders among Seoul subway users has risen to 15%, and an analysis showed that 66% of the company's annual net loss is due to free rides.

This is not just a Seoul issue; losses from free rides in urban rail corporations across the country, including Busan, Daegu, Gwangju, Incheon, and Daejeon, reached 650 billion won last year. Therefore, local governments argue that the government should compensate for losses caused by free transportation. They claim that in the past, the government introduced welfare policies but ultimately shifted the burden to local governments. However, the government insists that it is not appropriate to pour national funds into municipally owned urban rail systems and remains passive.

At the same time, it is not easy to eliminate free subway rides for seniors now. The government plans to discuss various preferential treatments for the elderly and reforms to social security systems in preparation for entering a super-aged society, but these are still in the early stages. With by-elections next year and the presidential election the year after, neither ruling nor opposition parties are likely to give up the votes of the 2 million senior voters. Therefore, alternatives such as raising the age eligibility for free rides or differentiating by income, considering the original purpose of guaranteeing mobility rights for socially isolated and disconnected seniors after retirement, have been steadily proposed.

Ultimately, since raising fares to cover part of the losses is the most realistic option, Seoul City recently proposed a subway fare increase of 200 to 300 won for the first time in five years. However, due to social distancing measures from COVID-19 reducing ridership and the worsening economy for ordinary citizens, public opinion opposes fare hikes, making the situation difficult. Even before COVID-19, the basic fare for the Seoul metropolitan subway had been frozen for over five years after a 200 won increase from 1,050 won to 1,250 won in 2015.

If deficits continue to grow without fare increases or government support, the most concerning issue is investment in safety. Based on Line 1, Seoul's subway system is already over 40 years old, and many areas require attention, including replacing aging trains, repairing tracks, and upgrading facilities. With over 8 million daily users, Seoul's subway must not operate recklessly at the expense of citizens' safety.

/ Jo In-kyung, Deputy Head of Social Affairs Department ikjo@

This content was produced with the assistance of AI translation services.