MONTEVIDEO, Uruguay – The country has reduced its poverty rate from 14% to 10.7% and its indigent population rate from 3.5% to 2% from 2008 to 2009, making it the Latin American nation with the lowest rate of poverty, according to the Economic Commission on Latin America and the Caribbean (ECLAC).
Uruguay’s 3.3% decrease in its poverty rate is attributed more to the growth of the individual median income (2.1%) than to income distribution (1.2%), according to ECLAC’s report Social Panorama of Latin America, which analyzed poverty and indigence rates from 18 Latin American countries.
Andrés Scagliola, national director of Social Policies at the Ministry of Social Development (MIDES), said three main factors contribute to the drop in the poverty rate.
First is the increase in the national monthly minimum wage, which since the Frente Amplio party came to power in 2005 has risen from US$105 to US$240.
Secondly, Scagliola said, is the restoration of collective negotiation in civil society during the past five years, the results of which have given the working class back its purchasing power after it had been stripped during the economic crisis of 2002.
Finally, he said the new taxation system implemented by the Frente Amplio has made a positive impact on income distribution.
Verónica Amarante, a researcher at the Economics Institute of the Economic Sciences School, Universidad de la República, said another factor to consider is the positive condition of the job market.
The average unemployment rate in Uruguay was 7.3% in 2009, whereas in 2008 it had been 7.6%, according to the National Institute of Statistics (INE).
“Uruguay had a growing tendency toward inequality which, for the first time since 1995, began to fall very moderately in 2008 and 2009,” Amarante said.
Social policies as key
Scagliola said economic policies during Tabaré Vázquez’s administration emphasized social issues.
The Fairness Plan, implemented by Vázquez’s administration, restructured the social welfare model, Scagliola added. The plan provides funding for literacy programs for adults and the “food card,” which gives between US$24 and US$65 monthly to the most needy Uruguayans, based on how many children under the age of 18 are living in the residence.
Public expenditure in Uruguay in 2008 was 21.7% of the gross domestic product (GDP), barely below what was spent in 2007, at 22%, but notably higher than 2004, at 19.5%, according to a report issued this year by MIDES’ Social Observatory of Programs and Indexes.
The three main sectors that benefitted greatly from the expenditure were safety and social assistance (50.8%), healthcare (20.6%) and education (17.3%), according to MIDES’ Observatory.
Infants and seniors
José Enrique Fernández, executive secretary of the Uruguayan Center for Data and Studies (CIESU), a think tank that does research on economics and social issues, said an imbalance “between risk and intergenerational welfare” exists.
“The most investment the government makes with regard to social security is for seniors, who show the lowest poverty indicators,” he said.
He added government must focus on children and adolescents, since they will be in charge of contributing to the country’s development.
But Fernández highlighted the importance of MIDES’s programs such as constructing classrooms geared toward preschoolers (“Classrooms to grow”) and using classroom space for adolescents entering or re-entering secondary school (“Community classrooms”).
Scagliola said public expenditure invested in infancy and adolescence is about 30%.
“We know today that a child who is not cared for and doesn’t receive early cognitive stimulation, nutrition and healthcare from birth to 3 years old will probably … repeat grades in elementary school and become disenfranchised from the educational system in secondary school,” he said.