Since 1984, turning 65 in Korea has come with one nice perk: free subway rides.
It has encouraged older adults to travel more for social gatherings, hiking and other activities, helping reduce rates of suicide and depression, as well as medical fees, according to research from the Korea Transport Institution.
However, as Seoul's city government pushes to raise subway and bus fares from as early as April, on top of a taxi fare hike that started Wednesday and a steep rise in gas and electricity rates, the free pass for older people has become a hot topic of debate.
Those aged 65 and up accounted for 17.6 percent of the city’s population as of late last year. The city projects the ratio to exceed 20 percent (1.85 million) in 2025, after having risen nearly 7 percentage points over the past 10 years.
Seoul Mayor Oh Se-hoon recently highlighted the free pass as a key factor that has led to snowballing losses for the city-funded metro operator.
He said the city has no choice but to raise subway fares by 300 or 400 won ($0.24 or $0.33), the first increase since June 2015, unless the Finance Ministry provides financial support, since it was the central government that introduced the benefit for the aged 39 years ago.
Seoul Metro said Thursday that raising the eligible age to 70 would reduce its losses by about 152.4 billion won.
Seniors aged 65 and above took some 196.6 million free rides last year, and a study on the city’s subway commute in 2020 showed that those aged between 65 and 69 accounted for 57.2 percent of the free riders. Seoul Metro’s estimated loss per free ride was 1,355 won.
“Almost 80 percent of the free riders are senior citizens,” a Seoul Metro official said.
“It’s impossible for the local government and the metro operator to bear all the losses from free riding.”
The city of Daegu is likewise reviewing raising the age to 70 from the current 65, and offering free bus rides as well for residents aged 70 or above.
The origin of the subway perquisite for seniors dates back to the Parents’ Day holiday on May 8 in 1980, when a 50 percent discount was offered to those aged 70 and older.
Under a law on the welfare of senior citizens enacted in 1981, that age was lowered to 65, and in 1984, upon orders from then-President Chun Doo-hwan, subway rides for older people became free of charge.
The perk was later offered to people of national merit and the disabled as well.
It was not much of a burden for metro operators back then, when the aged took up a smaller share of the population and South Korea had only a few subway lines, but as the country has rapidly aged, the free rides have become their biggest headache.
Statistics Korea expects the country’s population of people aged 65 and up to surpass 10 million next year, 19 million in 2049 (about 40 percent of the total population), and 17.47 million in 2070 (46.4 percent of the total population).
According to an estimate of financial aid for free rides by the National Assembly Budget Office, up to 4.35 trillion won will be needed to make up for the free rides in the five years from 2024 to 2028 as the population ages.
The Seoul city government and Seoul Metro have requested financial support from the central government.
The budget for public service obligation of local governments’ metro lines passed the parliamentary transport committee late last year, but was ditched in the plenary session due to opposition from the Finance Ministry.
Mayor Oh said in a press conference on Monday that even if fares are raised by 300 to 400 won, it would fall far short of covering the transport costs.
“Because the free rides system was introduced upon proposal by the then president, I think it’s logical that the central government make up for the losses, albeit partially,” Oh wrote via Facebook on Tuesday.
“If the Finance Ministry changes its mind to provide support within this year, we could adjust the amount of increase.”
The Finance Ministry, however, has said that as mayors and governors are responsible for the operations of subways, local governments should handle the matter.
“Since COVID-19, annual deficits have risen to over 1 trillion won, and free rides of senior citizens account for about 30 percent of the losses. … Seoul Metro managed to hold out so far by issuing corporate bonds, but now it has reached a breaking point,” Oh wrote.
“Had it been a private company, it would have gone bankrupt.”
Joo Ho-young, floor leader of the ruling People Power Party, said on Tuesday the parliamentary committee on strategy and finance should discuss the free rides issue where “the central government made the decision, and local governments pay for it.”
The government had considered raising the age bar in 2017, 2019 and 2020, but never carried through due to opposition from advocacy groups for older people.
It’s a tough call to make for elected officials such as chiefs of local governments or legislators who need to take into account voters of all demographics ahead of parliamentary elections next year.
But as all the delayed transport and public utility rate hikes are set to take place this year even in the midst of inflation, young people could have adverse feelings about having to pay about one-third more for subway rides to reduce losses at least partly due to older free riders.
Over the past five years, the city’s metro and bus businesses have posted annual average losses of 920 billion won and 540 billion won, respectively.
Losses in subway operation surged with the pandemic from 587.8 billion won in 2019 to 1.14 trillion won in 2020, 995.7 billion won in 2021 and an estimated 1.26 trillion won last year.
Bus deficits went from 353.8 billion won in 2019 to 678.4 billion won in 2020, 735 billion won in 2021 and an estimated 658.2 billion won last year.