|
Uruguay 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.
Data as of December 1990
|
