South Korea faces significant challenges in maintaining its current senior welfare policies, particularly free subway rides for senior citizens. Current policies not only threaten the country’s fiscal sustainability but also raise questions about the nation’s ability to cope with a rapidly aging population.

As the elderly population continues to grow and the birth rate remains low, policymakers are confronting questions about how to address these risks and consider alternative solutions to ensure the long-term viability of senior welfare programs.

Lee Jun-seok, the former leader of the New Reform Party (NRP), brought these issues to the forefront earlier this year when he pledged to abolish the country’s free-ride policy for senior citizens.

Lee argued that the existing policy places an undue burden on the country’s national railway operator, Korea Railroad Corporation (Korail), leading to increased debt that future generations will ultimately have to bear.

As an alternative, the NRP proposed providing senior citizens with annual transportation vouchers worth $87 (120,000 won). Once the voucher is exhausted, seniors would receive a 40% discount on transportation costs.

But this proposal sparked an intense debate not only on the free-ride policy but also on the broader issue of welfare policies for South Korea’s senior citizens.

DEMOGRAPHIC SHIFTS AND POLICY EVOLUTION

South Korea’s free ride policy for senior citizens has evolved since its introduction in May 1980, when it initially provided a 50% discount on transportation costs for citizens aged 70 or older. The Elderly Welfare Act of 1981 redefined the senior citizen age from 70 to 65, which remains the standard today.

In 1984, the South Korean government further reformed the law, replacing the 50% discount with completely free transportation rides for senior citizens.

However, since the policy’s inception, South Korean society has undergone significant demographic shifts that have prompted a reevaluation of senior welfare policies. The elderly population has grown from 4% in 1980 to about 20% today, driven by a steadily decreasing birth rate and improved health care and sanitation, among other factors.

According to Statistics Korea, South Korea’s total fertility rate fell to a quarterly low of 0.65 in the fourth quarter of 2023, making it the lowest among the Organization for Economic Co-operation and Development (OECD) countries. Simultaneously, life expectancy has risen from 66 in 1980 to 84 today.

Concurrently, Seoul Metro — a government-owned rapid transit system that serves the Seoul Metropolitan Area — has recorded a net loss of around $771 million (1 trillion won) annually since 2020.

South Korean senior citizens playing chess in a park, March 16, 2013 | Image: Terence Lim via Flickr (CC BY-ND 2.0)

A COMPLEX PROBLEM

The NRP’s pledge to abolish free rides aims to alleviate Korail’s financial burden. However, the relationship between free rides and transportation costs is not straightforward, raising questions about the proposed policy’s effectiveness in addressing the accumulation of transportation debt.

For instance, the Korean Society of Transportation — a professional academic organization that conducts research and promotes the development of transportation-related fields — reported that the increasing number of senior citizens taking advantage of the free-ride policy has not led to a corresponding increase in the number of subway trains that Korail operates.

This suggests that the policy might not be the primary factor contributing to Korail’s ballooning debt. Moreover, abolishing free rides, as the NRP proposes, could lead to unintended socioeconomic costs.

Chung Soon-dool, a specialist in social welfare and elderly studies at Ewha Womans University, argues that the absence of free rides would discourage financially struggling elderly groups from participating in economic activities, which could negatively impact their mental and physical health.

“The free-ride policy enables the elderly to stay active,” Chung told Korea Pro. “It helps them maintain their health. They can go out and meet people, which keeps them tethered to society and ensures that they don’t stay isolated. So, practically speaking, it has the effect of staving off illnesses and subsequent medical costs.”

Chung describes free rides as “beneficial” from an economic perspective and says that abolishing the free-ride policy could impose additional “unseen” costs.

POTENTIAL ALTERNATIVES

Nonetheless, Chung emphasized the need to review the free-ride policy. She pointed out that South Korea’s elderly population will account for 40% of the total population in 30 years, raising questions about the sustainability of the current system.

The expert suggested offering free rides on a selective basis, targeting groups that struggle to access transportation rather than unconditionally providing free subway rides to all senior citizens.

“It would make more fiscal sense to reserve the free-ride policy only for those who need it,” Chung said.

Another potential alternative is raising the legal age a person has to reach for the government to officially categorize them as senior citizens, according to Chung. Such a move would delay the government from having to provide free subway rides to an increasing number of citizens, thus relieving budgetary pressures.

However, this idea will likely face significant resistance from South Korean voters, especially as the country ages. The number of people aged 65 or older in South Korea is expected to exceed 10 million this year, making them about 20% of the country’s population.

As advocacy groups for senior citizens, such as the Korea Senior Citizens Association, inevitably grow in size and influence, political leaders will be less willing to oppose them.

People Power Party floor leader Yoon Jae-ok (left) meets with Kim Ho-il, the president of the Korea Senior Citizens Association, to discuss government policies for South Korean senior citizens, Jan. 17, 2024 | Image: People Power Party

BALANCING FISCAL RESPONSIBILITY AND SOCIAL WELFARE

As South Korea grapples with the challenges posed by its rapidly aging population, the debate surrounding the free subway rides policy for senior citizens will continue to intensify.

Municipal governments have come under financial strain due to increased energy costs, leading some government officials, such as Seoul Mayor Oh Se-hoon, to propose increasing subway fares and cutting the free-ride benefit for seniors.

However, this proposal is controversial, given that South Korea’s seniors have one of the highest relative poverty rates among OECD countries, with 40% of seniors living in relative poverty in 2020.

The free-ride policy has also given rise to a new industry, the silver subway courier service, which provides employment opportunities for retired seniors who use the metro system to deliver packages. Cutting the free-ride benefit could eliminate this vital source of income for many elderly citizens.

The ongoing debate highlights the need for a comprehensive approach that addresses the needs of the elderly population while ensuring the long-term viability of the welfare system. 

However, with South Korean politics facing near-constant gridlock, it remains to be seen if the issue will gain traction with risk-averse legislators reluctant to rock the boat with elderly voters.

Edited by John Lee