Will National Assembly hitch finance minister to keep Seoul's metro free riders happy?

Seoul Mayor Oh Se-hoon, left, shakes hands with Rep. Yoon Young-seok of the ruling People Power Party (PPP), president of the National Assembly's Strategy and Finance Committee, at the lawmaker's office in the National Assembly in Yeouido, Seoul, Wednesday. The mayor visited Yoon to gain support in persuading the finance ministry to help the city's subway operator to keep offering free rides senior citizens. Yonhap

Finance minister says welfare burden should fall on city government

By Ko Dong-hwan

Seoul Mayor Oh Se-hoon sought the support of National Assembly lawmakers on Wednesday in his bid to have the finance ministry help the city's subway operator keep offering free rides to senior citizens.

The mayor's effort to rally support from the parliament came a day after the Ministry of Economy and Finance rebuffed his repeated calls to share the burden for free subway rides for the elderly.

The ministry said the financial burden should be handled by the city itself rather than relying on the central government.

The mayor met three key lawmakers from the National Assembly's Strategy and Finance Committee, including the committee president Rep. Yoon Young-seok from the ruling People Power Party (PPP).

Oh, accompanied by Vice Mayor Oh Shin-hwan, told the committee that the city's subway operator has been weighed down by snowballing net losses as it hasn't raised fares in the past eight years. Now that the operator is about to hike the fare, the impact would be minimized if the ministry supported the city government with funding, he said. The mayor also mentioned the necessity of a legal revision to correct the current financial hardships facing Seoul and other subway-operating local governments.

Rep. Yoon said he also saw the money-losing operation of the city's subway system, which has been going on for years, as a serious problem.

"There should be countermeasures like raising the minimum age limit from the current 65 to an older age to allow free subway rides," the lawmaker told the mayor. "We will discuss the matter with the committee."

An elderly patron approaches a subway turnstile inside Jongno 3-ga Station in Seoul, Wednesday. Yonhap

"This is the problem shared by the ruling and the opposition parties," the mayor told reporters at the National Assembly following the meeting. "I understand the central government might feel pressured, but it is necessary to solve the fundamental problem."

Finance Minister Choo Kyung-ho told the National Assembly on Tuesday it would be "odd" for the ministry to fund the financially-soundest city in the country. Choo, also the country's deputy prime minister, said the central government is in debt and there is no "logical reason" why his ministry should help a local government that is complaining about a local problem.

Choo appeared at the National Assembly on Tuesday where lawmakers questioned ministries related to the country's economic affairs. The parliamentary questioning of the central government ran from Monday to Wednesday.

"It's the Seoul city government's business and it should solve it by using its own budget," Choo said in response to a question by Rep. Hong Suk-joon of the PPP. "Whether to charge zero fares to senior citizens is also up to the city government to decide."

The minister said the central government is not being asked by other local governments that are less financially independent, like South Jeolla Province or North Gyeongsang Province, for extra funds, adding it would be unfair to help only the Seoul city government.

"It just doesn't make sense for us to help a city government with the country's most robust financial status," the minister said, Tuesday. "It should first figure out fundamental measures achievable by itself, like improving the efficiency of the service or reducing costs."

Oh has been arguing that the welfare policy for the city's senior citizens was not introduced by the city government but the central government, which is why it should be responsible for financially supporting the local government.

Minister of Economy and Finance Choo Kyeong-ho enters Government Complex in Seoul, Feb. 3, to attend an emergency economic cabinet meeting. Yonhap

The standoff came amid looming hikes in the city's public transit fares for buses and subways starting in April. Although not yet finalized, the fare hike will be between 300 and 400 won ($0.24 and $0.32). The hike comes as Seoul Metro, the city's subway operator, suffered years of widening net losses widely blamed on a decades-old policy offering free rides to people aged 65 or more.

The volume of free riders in Seoul accounts for 55 percent of those in the entire country. In Seoul alone, 16 percent of those who used Seoul Metro in 2022 were free riders. The uncharged fares are equivalent to 278 billion won, 30 percent of the subway operator's total net loss of 939 billion won.

The free rides started in 1980 when the Park Chung-hee regime offered a 50 percent discount to people aged 70 or older. The age limit was lowered to 65 in 1982. And in 1984, under the Chun Doo-hwan regime, free rides were offered to senior citizens, which have continued until now. All costs that arose from the free subway rides were shouldered entirely by local governments.

Back then, however, the population of senior citizens in the country was smaller than now. And the financial burden on local governments offering free rides snowballed as the number of senior citizens increased. In 1995, Seoul's subway operator suffered a loss of 14.8 billion won ($11.8 million) due to the free rides. In 2021, the loss widened to 297 billion won.

Local governments in the country operating their own subway system are Seoul, Busan, Daegu, Incheon, Gwangju, Daejeon and Gyeonggi Province. As of 2021, their total financial losses due to the free riders reached 507 billion won. Eighty-three percent of the passengers who rode the country's subways for free were senior citizens.

The number of senior citizens is expected to increase. Last year, out of Korea's population of 51 million, over nine million, or 17.5 percent, were aged 65 or older. If the country's low birth rate persists, the population is looking to drop to 42 million and 44 percent will be aged 65 or older by 2060, according to Statistics Korea's future population forecast.

"If the finance ministry covered at least part of Seoul Metro's business losses, the transit fare hike could be adjusted down to a lower amount," Oh said at a press conference at Seoul City Hall on Jan. 30.