[News Terms] 'PSO' Gaining Attention for Senior Citizens' Free Subway Rides

[Asia Economy Reporter Kim Jong-hwa] 'PSO (Public Service Obligation)' literally means 'public service obligation.' In Korea, the meaning has been expanded to 'support for loss compensation due to public service.' It is a concept that adds the meaning of 'loss compensation support' to 'public service obligation.'

Electricity, gas, telecommunications, transportation, postal services, and finance are essential services for the public. If these services are entrusted to the private sector, the pursuit of profitability over public interest may lead to the provision of inadequate services for profit-making reasons, such as not providing normal services because they are not profitable, causing significant inconvenience to the public.

Citizens are passing through the ticket gates at City Hall Station on Seoul Subway Line 1. Photo by Hyunmin Kim kimhyun81@

To prevent this, the government or local governments impose obligations on companies to provide such services. The losses incurred while forcibly performing these public obligations must be compensated by the government or local governments, which is collectively referred to as 'PSO.'

Recently, as Seoul City pushed for a public transportation fare increase and public opinion grew hostile, Seoul City and the Ministry of Economy and Finance engaged in a responsibility dispute over loss compensation for free subway rides for the elderly, bringing 'PSO' back into the spotlight.

The Ministry of Economy and Finance argued that urban railroads operated by local public enterprises fall under local government affairs, so the decision-making authority and cost burden lie with the local governments. On the other hand, Seoul City stated that free rides for the elderly were introduced in 1984 by presidential directive and apply to all citizens nationwide regardless of residence, so it is a national responsibility, not a local government one, and the government should provide PSO support.