Seoul Metro pays 370 million won in interest every day, equivalent to about 140 billion won a year. With improving its financial structure urgent, its union has announced a general strike for the 25th.
According to the Seoul Metropolitan Council and others on the 12th, the corporation's debt stood at 8.2501 trillion won at the end of August this year, up about 500 billion won from 7.756 trillion won at the end of last year.
The debt originated from the liabilities that Seoul Metro and Seoul Metropolitan Rapid Transit Corporation each carried before the merger. Even after the two bodies were combined in 2017, the debt did not shrink. It passed the 6 trillion won mark in 2020 and 7 trillion won in 2024, and topped 8 trillion won this year.
The corporation's internal outlook is even bleaker. An analysis shows that if the current structure is maintained without additional capital injections, it will fall into full capital erosion in 2033. In 2030, debt is projected to grow to 13 trillion won and the debt ratio to reach 400%. The interest burden is bound to grow every year.
The root of the deficit is the highly public nature of the urban rail business. Fares are hard to raise, so costs are not properly recovered. Fixed costs such as labor and depreciation are also heavy. Operating losses are also piling up from free rides and expanded transfer discounts.
The largest share of public service costs is free-ride transport. Last year's free-ride losses came to 448.8 billion won, equivalent to 55% of all public service costs. The gap between transport cost and fares also persists. Last year, carrying one passenger on Lines 1 to 8 cost 1,817 won, but the average fare was only 1,036 won, a loss of 781 won per passenger.
The corporation and the Seoul city government discuss financial improvement measures every year, but the limits are clear. The corporation covers part of its losses with city subsidies. However, continued investment in aging facilities is needed, making it hard to reduce the financial burden in a short time.
Strikes that recur every year are also a burden. The Seoul Metro Union, the largest union, said it will launch a general strike on the 25th, demanding more hiring and pay raises. In this year's wage talks, the union proposed a 5.2% increase on a total-payroll basis. It also demanded the withdrawal of a plan to cut 2,212 positions. It also wants the corporation to fill long-term vacancies caused by parental leave and other absences, as well as positions left unfilled after retirements. The union also announced a strike last December but withdrew it after a dramatic last-minute agreement with management at dawn on the scheduled day.
While focusing on negotiations with the union, management plans to ask the government to legislate state funding for free-ride losses. The corporation explains that fare increases are limited because of its public role. It also cites rapid population aging and soaring management costs. Its position is that its own improvement measures alone have limits.
Support for free-ride losses is also something the union demands of the government. Although wage and collective bargaining talks have broken down, labor and management agree that the state should share this cost. Earlier this month, Kim Jung-seop, chairman of the Seoul Metro Union, and Kim Tae-gyun, president of Seoul Metro, jointly held a public campaign in the concourse of Gwanghwamun Station, urging the legislation of government support for free-ride losses.