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Water line at an elementary school in a barrio of Colonia
Courtesy Inter-American Development Bank

Children playing in a barrio of ArtiÍÍÍÍgas
Courtesy Charles Guy Gillespie

Delivering milk in Treinta y Tres
Courtesy Inter-American Development Bank

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 2d6). Altogogether, 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.

Data as of December 1990