Seoul's fiscal burden for city bus operations is poised to snowball after the Supreme Court ruled that regular bonuses paid to city bus drivers must be included in ordinary wages. With more than 7 trillion won ($5.1 billion) in taxpayer money already poured into the system since the introduction of the semi-public bus operation scheme, critics argue that structural reform is urgently needed as wage growth for bus drivers has far outpaced that of general industrial workers over the past two decades.
According to the "Seoul Bus 2026 in Statistics" report compiled by the Seoul Bus Transport Business Association and obtained by Seoul Economic Daily on Thursday, the monthly average labor cost for Seoul city bus drivers surged 107.9% from 2.48 million won when the semi-public system began in 2004 to 5.15 million won in 2024. By contrast, average labor costs for all industrial workers rose just 78.6% over the same period, from 2.25 million won to 4.03 million won. On an annualized basis, bus drivers' wages grew 5.1% a year, steeper than the 3.7% average across all industries.
The sharp increase in labor costs has significantly pushed up the "standard transport cost," the benchmark used to calculate the daily cost of operating a single bus. Seoul's standard transport cost soared 95.8% from 441,867 won in 2004 to 865,353 won in 2023. The labor cost component within this figure jumped 124% from 281,893 won to 633,495 won, raising the share of labor in total standard transport cost from 63% to 75%.
The swelling operating costs have translated directly into fiscal pressure on the Seoul Metropolitan Government. Under the current semi-public system, local governments must cover any shortfall when operating revenues fall short of costs. Cumulative subsidies paid by Seoul to cover city bus deficits from the second half of 2004 through last year totaled 7.15 trillion won. Annual subsidies have more than quadrupled from 124.6 billion won in 2004 to 512.7 billion won in 2025. Critics argue that this structure, in which deficits are automatically absorbed by taxpayers, weakens private bus operators' incentive to cut costs on their own.
The Supreme Court's ordinary wage ruling is expected to pour fuel on this fiscal fire. According to Seoul's estimates, including regular bonuses in ordinary wages could push bus driver wages up by as much as 16.4%. Combined with the 2.9% base wage increase agreed upon earlier this year, the effective pay rise would exceed 19%. Given that every 1% increase in bus driver wages costs the city roughly 11 billion won, a 19% increase would add about 209 billion won in fiscal burden. Some projections indicate that Seoul's annual subsidy for maintaining the semi-public bus system could exceed 700 billion won.
Despite the massive fiscal injection, convenience for riders has gone backwards. The number of licensed city buses in Seoul shrank by 925 units, from 8,307 in 2004 to 7,382 in 2024. Fewer buses in operation mean longer intervals between services, inevitably inconveniencing passengers. Some argue that fare hikes are inevitable to address the ballooning deficit, but with public backlash likely amid high inflation, calls for a fundamental overhaul of the semi-public system are gaining traction. Observers expect the debate to intensify after the upcoming local elections.
"To achieve appropriate fiscal management, we should actively consider switching to a 'pre-determined wage system' for bus drivers," said Lim Sam-jin, director of the Green City Research Institute. "We also need to consider establishing a separate, independent funding source for public transportation operations, such as introducing congestion pricing as is done in major cities overseas."
