Uruguay has been described as South America's "first welfare state" as a result of its pioneering efforts in the fields of public education, health care, and social security. The steady rise in public employment, often by the creation of jobs that fulfilled no particular function, served to keep the unemployment level down, particularly in election years. However, the stagnation of the economy starting in the 1950s put increasing strains on this system. In particular, declining tax revenues and increased spending produced large government deficits and accelerating rates of inflation. Foreign advisers began to recommend severe budget cuts as the only solution to the chronic fiscal crisis.

During the first half of the twentieth century, Uruguay, along with Argentina, led Latin America in its advanced standards of medical care. Even in 1990, the University of the Republic's medical school had a high international reputation and continued to attract students from other countries in South America. Starting with the progressive reforms of the early part of the twentieth century, the state has taken a leading role in the provision of health care, particularly for the lower classes. Private medicine remained the preferred option of the middle and upper classes, however. Under military rule from 1973 to 1985, standards of care in public hospitals and clinics were adversely affected by budget restrictions.

By the 1970s, Uruguay's welfare state had declined sharply in the standards of protection that it afforded to the mass of the population. The government bureaucracy, however, continued to swell. Total health care spending in 1984 represented 8.1 percent of GDP, a proportion similar to that of the developed world. In the same year, about 7.5 percent of household spending went to health care, but 400,000 Uruguayans were without state or private health care coverage.

Under the civilian administration inaugurated in 1985, progress was made in redirecting the budget away from spending on the military and toward social welfare. Defense spending fell from 13.0 percent of government outlays in 1984 to 11.8 percent in 1986. Over the same period, social security decreased from 31.5 percent to 27.6 percent, but education grew from 7.4 percent to 10.1 percent and sanitation from 4.3 percent to 6.7 percent of public expenditure.

In 1987 Montevideo had over sixty public health facilities, including seven major public hospitals. About half the interior departments had their own hospital; the rest had only a centro auxiliar (auxiliary center). Altogether, Uruguay's public health system had about 9,505 hospital rooms available.

In 1985 the number of inhabitants per physician was 466, about the same rate as in the developed world. However, the distribution of health care services was highly skewed. Outside Montevideo the ratio was a much less favorable 1,234 citizens per physician; by contrast, there were only 262 inhabitants of Montevideo for every doctor.

Infant Mortality and Life Expectancy

The infant mortality rate was 48.6 per 1,000 live births in 1975. In the first half of the 1980s, it fell to 37.6 per 1,000-- low by Latin American standards but still almost twice the rate of Chile and Costa Rica. In the second half of the decade, however, infant mortality began to decline to levels close to those of the latter two countries: in 1986 it was 27.7; in 1987, 23.8; in 1988, 20.3; and in 1990, 22. The increasing share of government spending devoted to infant health care and nutrition programs appeared to have been one reason for this sharp improvement.

The average life expectancy at birth in 1990 was seventy years for men and seventy-six years for women, only slightly behind Chile, Costa Rica, and Argentina. The mortality rate remained just below 10 per 1,000 population in the 1980s. The leading causes of death in 1985 included circulatory disease (40.2 percent), tumors (22.6 percent), trauma (4.1 percent), respiratory disorders and infections (3.8 percent), perinatal complications (2.4 percent), infectious diseases and parasites (2.4 percent), suicide (1.0 percent), and cirrhosis of the liver (0.9 percent).

In the late 1980s, Uruguay did not remain exempt from the worldwide epidemics of acquired immune deficiency syndrome (AIDS) and drug addiction among youth. Although homosexuals have been able to lead a relatively safe existence in Montevideo without fear of official persecution since the return of democracy in 1985, AIDS has become a greater concern. According to the Ministry of Public Health, by the end of June 1990 there had been 129 cases of AIDS in Uruguay since 1983, when it was first detected. Of those cases, 100 were from Montevideo and 29 from the rest of the country. Fifty-nine of the cases were contracted inside Uruguay, whereas seventy of the victims caught the virus outside the country. One hundred and seventeen of the cases were men; twelve were women. An additional 627 individuals were found to be carrying the virus, without having yet shown symptoms of the disease. In the 1983-89 period, sixty-five people were known to have died of complications resulting from the human immunodeficiency virus (HIV).

In 1989 Uruguay still enjoyed the image of a "clean" country insofar as drugs were concerned. In response to some significant negative signs, however, the government formed the National Board for the Control of Drug Trafficking and Narcotics Abuse in January 1988. The board included representatives from the office of the president and the ministries of public health, education and culture, and interior. It found that drug addiction grew continuously in Uruguay in 1988. The number of adult drug addicts had more than doubled from 321 in 1983 to 697 in 1987; the number of children addicted to drugs had quintupled from 62 in 1983 to 292 in 1987. According to the Ministry of Public Health, the drug consumer was predominantly single, with good family relations, and the majority had attended secondary school; half of the total were employed. The most commonly abused drug was marijuana, followed by amphetamines and industrial-use inhalants; cocaine and lysergic acid diethylamide (LSD) were also included on the list, but to a lesser extent.

State and Private Health Care

In 1971 about 82 percent of hospital beds were provided in establishments run by the Ministry of Public Health. The same public hospitals accounted for 69.5 percent of hospitalizations. About 61 percent of visits to general practitioners were covered by private health plans known as mutuales (mutuals). In the same year, 58.9 percent of the inhabitants of Montevideo were covered by these private associations. About 11.8 percent had the official health card of the Ministry of Public Health, entitling them to free health care. A further 6.8 percent had other health plans, usually through their place of work. This left 5.8 percent with multiple forms of coverage and 16.6 percent with no coverage at all.

In 1980 there were 9,089 public hospital beds, about threefifths in the capital and the remainder in the rest of the country. During the period of military rule from 1973 to 1985, the government had shifted health care spending toward military hospitals, which were, however, open only to relatives of the members of the armed forces. After 1985 the government made a sustained effort to increase health care coverage. From 1985 to 1988, public health cardholders increased from 566,000 to 692,000 in the interior but decreased slightly from 323,000 to 310,000 in Montevideo.

At the end of 1984, there were 918,000 members of private health plans in Montevideo and 325,000 in the rest of the country. By 1988 the numbers had risen to 963,000 and 488,000, respectively. Overall, this represented a 17 percent increase in the membership of the mutuales from 1984 to 1988. As with the state health provision, the greatest increase in coverage occurred in the interior, where it was most needed.

A concurrent effort was made to increase the proportion of infants receiving inoculations. In 1985 there were 503 cases of whooping cough, and in 1986 there were 1,117; but in the first nine months of 1988, there were only 21. Over the same period, the number of cases of measles first rose from 160 in 1985 to 1,190 in 1987 but then fell sharply to just 73 in the first nine months of 1988. The proportion of infants immunized before age one rose from 61 to 79 percent in 1985 to 80 to 88 percent in 1987, depending on the particular vaccination.

Government investment in health care equipment rose dramatically after the return to democracy, climbing from US$564,000 in 1985 to US$2.2 million in 1987. Over the same period, expenditures on construction of health care facilities rose from US$772,000 to US$2.7 million. Total spending by the Ministry of Public Health rose 34 percent in real terms, while spending on medications doubled. Grandiose plans for new hospitals to be financed by foreign development loans were announced in 1989, but their realization remained a distant prospect.

Social Security Pensions

Uruguay pioneered social security pension programs, starting as early as 1896 with a fund for teachers. The plans were subsequently extended piecemeal to different sectors of the labor force and soon grew extremely complex and bureaucratic. A system of family allowances (based on the number of dependent children) was introduced in 1943 and consolidated in 1950. Unfortunately, the provision of welfare benefits became politicized as politicians from rival parties would intercede on behalf of voters to speed up the endless delays.

Ultimately, the system of benefits began to be abused by politicians in order to "buy" votes. The most notorious example was the case of the seamstresses: far more pensions were handed out to alleged garment workers than there were garment workers. Criticism of the various programs became vociferous by the 1960s, and the programs were reorganized in the single Social Welfare Bank under the 1967 constitution. During the military regime of 1973-85, further efforts at rationalization were undertaken, including the consolidation of most funds under the General Directorate of Social Security (Dirección General de Seguridad Social--DGSS). The number of claimants continued to rise rapidly, however, reaching 629,077 in July 1984.

Social security transfers were not all paid out in the form of pensions, although in 1983 these accounted for 78.3 percent of total outlays. Other categories included family allowances for households with young children (6.4 percent in 1983) and benefits for sickness (4.8 percent) and for unemployment (3.0 percent). However, these had suffered similar declines. In 1983 the total outlays of the DGSS were financed as follows: employers' contributions, 28.1 percent; workers' contributions, 28.1 percent; and state contributions, 43.8 percent.

Uruguay's population has continued to age since 1963, as the censuses of 1963, 1975, and 1985 show. In 1985 the average age of the population was 30.3 years. The percentage of the population over age sixty rose from 11.6 in 1963, to 14.3 in 1975, and to 15.7 in 1985. Those over age sixty-five accounted for 7.6 percent, 9.8 percent, and 11.1 percent, respectively, in the same years. This long-term aging trend, similar to that of developed countries, worried social planners because of the projected strain on social security programs. It was compounded by the high life expectancy of Uruguayans after retirement: sixteen years for men and twenty years for women.

The population's aging trend also made the impact of the decline in the real value of pensions even more serious because it affected an increasingly large share of the population. However, with the return to democracy in 1985, efforts were made by the Colorado administration of Julio María Sanguinetti Cairolo (1985-90) to restore some of their real value. Although the opposition parties severely criticized the Colorados for not increasing social security payments faster, these at least grew 20 percent from 1984 to 1987 in real terms. The greatest increases were awarded to those receiving the smallest pensions.

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Source: U.S. Library of Congress