Assessment of a hybrid reform path: Social and labour policies in Uruguay, 1985–2005

• Date: 01 September 2009
• Author: Fernando FILGUEIRA,Pablo ALEGRE
• Published date: 01 September 2009
• DOI: http://doi.org/10.1111/j.1564-913X.2009.00065.x

International Labour Review, Vol. 148 (2009), No. 3

Copyright © The authors 2009

Translation and journal compilation © International Labour Organization 2009

Assessment of a hybrid reform path:

Social and labour policies in Uruguay,

1985–2005

Pablo ALEGRE† and Fernando FILGUEIRA*

Abstract. Since Uruguay’s return to democracy in 1985, a shift in economic and

social policy has radically changed the country. The outcomes have been shaped by

adjustment to international circumstances “by default”, stop-go market reforms and

the inconsistent pace and content of reforms. Unlike other countries in the region,

Uruguay has not followed a resolutely neo-liberal course, but rather a hybrid one.

The end result has been a liberal labour regime coupled with a three-dimensional

social policy balancing the market, the old corporatist welfare State and the new wel-

fare state targeting specific beneficiaries.

ince 1985, Uruguay has undergone radical political, economic and social

Stransformations. Free-market reforms have been inconsistent, while

social policy has sought to strike a balance between the market, the old corporat-

ist welfare state and the new “targeted” welfare state, but without adequate coord-

ination. The result has been a deteriorating mismatch between social risk and the

State’s social welfare system (in terms of quantity, quality and distribution).

Two fundamental changes have occurred in the labour market and family

spheres since 2000. On the one hand, structural unemployment and precarious

employment have spread. On the other hand, marital arrangements have

become more unstable and new family configurations have appeared, especially

as a result of women becoming breadwinners.

† Pablo Alegre was only 27 years old when he passed away on 20 September 2009, after a

long fight against cancer, as this article was being finalized. He was a researcher for the Integration,

Poverty and Social Exclusion Programme of Universidad Católica del Uruguay, in Montevideo.

* Soc ial Affairs Officer, Economic Commission for Latin American and the Caribbean (ECLAC).

Email: ffilgueirap@gmail.com. Fernando Filgueira wishes to pay tribute to Pablo Alegre’s out-

standing human and intellectual values, and considers this article – part of his legacy – to be proof of

his huge potential.

Responsibility for opinions expressed in signed articles rests solely with their authors and

publication does not constitute an endorsement by the ILO

318 International Labour Review

In the wake of these two major transformations other changes have fol-

lowed. The traditional family model has become blurred, and families have to rely

on two or more wage earners for an adequate standard of living. This develop-

ment is tightly linked to the massive influx of women into the labour market.

Simultaneously, “de-industrialization” has reduced the supply of jobs requiring

traditional qualifications and skills, while raising the threshold of educational

and human capital requirements for a “decent job”. The weight of “social inher-

itance” has become painfully evident as people with insufficient social capital

remain stuck in unemployment and poverty.

The resulting reconfiguration of social risk is radically divorced from a wel-

fare-state system based on assumptions of formal – i.e. stable and protected –

employment in traditional occupational categories, of households headed by

male breadwinners and of a two-parent, stable nuclear family. Obviously, the

positive legacy of this model is not to be belittled. It has so far guaranteed social

welfare for the elderly. But partly because of that legacy, a major part of the bur-

den of risk has been shifted onto younger people and women, especially those

who are family breadwinners. The State’s response to this shift in the distribution

of social risk has been slow, inconsistent and – at times – misconceived, thereby

worsening inequality between generations and social strata.

Almost 60 per cent of social expenditure takes the form of transfer pay-

ments to senior citizens, most of whom used to hold formal, stable, long-term

jobs. Population ageing also explains their disproportionate share of health

expenditures on account of the medical specialization and sophisticated tech-

nology required for the treatment of cardiovascular and degenerative disorders.

Besides, since the health-care system relies on an employment-based insurance

scheme, its coverage has been shrinking with the growth or consolidation of

informal employment. The current welfare model is thus not structured to meet

the needs of the large numbers of mothers and vulnerable children living on low

income, with scant prospects of finding formal employment, and exposed to

high health risks.

Education presents a somewhat different picture. Here, the model seemed

to match the risk structure, at least until 2000: full-time schools in the most vul-

nerable areas, near-universal pre-school coverage for four- and five-year-olds,

and efforts to promote secondary education and reduce drop-out rates suggest

that policy – despite its shortcomings – kept pace with the transformation of soci-

ety. Nevertheless, adjustment has not gone far enough as problems of retention

and academic achievement persist in secondary schools.

As for industrial relations, the transformation they underwent took the

country from a tripartite, industry-based model of collective bargaining to a

strongly decentralized, company-based one without state involvement. This has

contributed to further wage dispersion – i.e. greater inequality. What is more,

economic restructuring followed by economic crisis led to reduced employment

protection in some industries, with a growing imbalance between those produc-

ing tradeables and those producing non-tradeables, and difficult fiscal and pro-

duction problems.