Seoul Metro, which manages and operates the Seoul subway, and “Seoul Metropolitan Rapid Transit Corporation (SMRT)” are to be reborn as one organization. Celebrating the tenth anniversary of the mass transport reforms that centered on buses in 2004, the Seoul Metropolitan Government announced extensive plans to reform the subway system and presented the framework for “subway integration.”
This is the first action plan of the Seoul Metropolitan Government’s “Investor and Funding Organization Reform Measures.”
In November 2014, Seoul Mayor Park Won Soon announced organizational reform through the “Investor and Funding Organization Reform Measures,” which included finance, safety, governance, and change in labor relations, to 18 investors and funding organizations that offer public services that directly affect Seoul citizens.
20 years of operation by Seoul Metro and SMRT…Perfect time to evaluate and reorganize the operation of subway
In 1994, while preparing for the opening of Subway Lines 5 through 8, the Seoul Metropolitan Government founded SMRT as a competitor to Seoul Metro in an attempt to induce improvement in the domestic subway industry and service. However, over the past 20 years, the separate operation of the subway has become increasingly ineffective due to a number of issues, including additional costs from overlapping personnel and tasks, as well separate purchasing of the same items. Also, many criticized the fact that having two corporations to manage the operation of the subway did not serve the object of founding the two different corporations. As a result, the city reviewed this two-corporation system.
Seoul Metro requires 3 times more people for 1km compared to Line 9…Operational efficiency “not great”
Prior to coming up with the two corporation Integration plan, the Seoul Metropolitan Government conducted a review of the operation of subway Lines 1 through 8, and found that it was lagging behind in terms of “operational efficiency” compared to Line 9, which is privately operated.
For example, the number of management personnel per station operated by Seoul Metro was 15, twice as many compared to the 7 on Line 9. Also, the number of operational personnel per 1km of subway line operated by Seoul Metro was 65, three times as many compared to the 26 for Line 9.
The number of management personnel per station, and per 1 km of subway line operated by SMRT, were 11 and 42 respectively, not too different from Seoul Metro.
The debt owed by the two corporations currently suffering from financial problems amount to KRW 4.6 trillion, and the cost to repair old and decrepit facilities stands at KRW 1.6 trillion. With an ever growing aging population, more than 30% of passengers were “free riders” last year compared to the 13% in 2009. Therefore, unless the government takes action, a grave deficit resulting from free rides is inevitable.
By referencing the case of the RATP Group, the French public transport operator under the Paris region transit authority called STP, Mayor Park expressed his hope that this reform will serve as the cornerstone that encompasses the integration of the entire public transportation infrastructure, including the subway, light rail transit, and all intra transit buses as well as inter- and intra-transit buses. The RATP Group was established by Paris, France, in 1949, and since then, the Group has been operating the subway, buses, trams, and high speed railroads as a single entity that is used by the 11 million people of Île-de France and 44 million tourists every year.
Strengthening of global competitiveness ▴Establishment of participatory labor relations ▴ Improvements in safety and service
Shying away from the existing integration method, which involved artificial layoffs or restructuring, this plan will be realized under the principle that every aspect of operation, organization, and task orientation will be boldly reformed through close collaboration between the parties involved—the Seoul Metropolitan Government, the two corporations, and the unions.
Once the reforms take place, ① the global competitiveness of the subway operator will be strengthened; ② participatory labor relations will be established, and ③ safety enhancement as well as ④ service improvements will take place in terms of the operation.
① Strengthening of global competitiveness
Once the integration reform takes place, it will first strengthen the global competitiveness of the transit operator that easily stands comparison with major metro operators around the world, including the MTA (US) and MTR (Hong Kong), in terms of scale and technology.
When integrated, the Seoul subway lines will cover a total length of 300.1km, longer than Paris (214km) and Hong Kong (211km). The number of passengers per day is also expected to be 6.8 million, in the ranks of Tokyo (6.22 million) and New York (5.47 million).
|Operator||Number of Subway|
|Hong Kong MTR||1,778||152||211||500|
|New York Subway|
As the oldest subway operator in Korea, “Seoul Metro” has the experience of operating the subway, and “SMRT” has the know-how of operating the largest transit company covering the total subway length of 162km. Therefore, a great synergy focused on technology and experience is expected from the integration of the two corporations. This will also create a number of opportunities for social investments, such as the establishment of compound mass transportation transfer terminals and the development of subway station areas. The integrated organization will also gain competitiveness in not only the operation of the subway but also the technology related to the subway, such as Seoul Metro’s “Subway Safety Door” patent and SMRT’s “electric locomotive development” technologies, will be shared and researched together.
Moreover, through group purchases of items, costs will be reduced by tens and hundreds of billion Korean won, every year. Up until now, the two corporations have only purchased simple maintenance or office items as a group due to the differences in timing and processing. However, once the two corporations are merged, group purchases can be made for large equipment, such as train cars and heavy machinery for track maintenance, which will greatly reduce the budget.
The Seoul Metropolitan Government plans to reorganize the personnel first in stages. Overlapping tasks between the two corporations, related to management support, planning, and safety maintenance, will be integrated in the first stage, followed by those in the control, station service, subway service to be integrated in the second stage, and the technological task will finally be integrated in the last stage. This will improve the overall work efficiency by not only allowing the corporations to effectively place workers in areas that have suffered from a lack of personnel, such as safety and service improvement and new projects, without the need to hire more people, but will also allow them to be redeployed in areas that require their specialties.
②Establishment of Participatory Labor Relations
Secondly, participatory labor relations will be established where the laborers and company can grow together. The Seoul Metropolitan Government will benchmark the German labor relations system and their experiences and adopt the “Board of Labor Directors system” and a “Joint Management Council” to guarantee the labor union’s participation in company management and to strengthen the responsibility of the laborers. The Board of Labor Directors system, through which the board member recommended by the union are dispatched to the company’s board and the “joint management council” that negotiates and decides on management issues along with the union will provide an opportunity for laborers to participate in the management of the corporation. This will guarantee the responsibility and the authority of the laborers and enhance management transparency and strengthen mutual trust between the union and the management, relieving the conflict and tension involved in traditional labor relations.
The Seoul Metropolitan Government plans to closely refer to Wolfsburg, Germany, and the Volkswagen Group, which developed into a global company, without experiencing a single strike in 10 years, through support programs led by the local government and smooth negotiations between the union and the company on reducing work hours and job security to overcome managerial crises.
Third, safety will be greatly strengthened as the subway operation and control system will be integrated. The systems, currently managed separately by the two corporations, will be integrated, allowing for a more rapid and uniform response to emergency situations in train cars or in operation. Also through the comprehensive management of worn-out facilities, it will be possible to make reasonable reinvestments in places where they are needed.
For example, regarding the recent safety issues surrounding subway vents, currently the two corporations are separately managing the vents in areas under their jurisdiction, leading to separate safety management and space utilization in these areas. Once integrated, however, these Issues will be managed together in a more comprehensive manner.
Fourth, the service aspect of the system will be improved. For instance, through the integration of the system, scheduling can be optimized, taking the transfer distance and the last train time into consideration. Also, the management of transfer paths has been difficult as subway stations and lines were built in stages. Yet once the corporations are merged, a comprehensive restructuring of the passenger movement path in the transfer stations can be made possible, as well as the construction of transfer paths for persons with disabilities or those travelling with babies in strollers.
Integration Reforms Begin in January 2015
With the announcement of the Seoul Subway Integration Plan, the Seoul Metropolitan Government will set up an “Integration Innovation Commission (tentatively named)” and begin the reforms in January 2015.
Through the Integration Innovation Commission, the city government will gather the opinions of people from all areas, including the management, labor unions, experts in accounting, law, and labor, civil organizations, and the city council, by April 2014 . Based on the overall consensus, a specific action plan will be announced in June.
By December 2015, the Seoul Metropolitan Government will modify the related regulations, such as ordinances and articles of association, aiming for organizational restructuring and the completion of the merger in 2016.
“Unfortunately, subway operators have been notorious for their ‘poor and lax management’ up to now,” said Mayor Park Won Soon. “But we will pursue dramatic reforms, changing everything except for the people and work hard so that the operating corporation can become a company that is respected and loved by our citizens. We will make the Seoul Subway the best in the world to make Seoul a better city for the next hundred years.”