Poverty in Uruguay was at borderline catastrophic levels less than 15 years ago. Uruguay has made strides over the past decade to dig itself out of a massive hole and has brought its poverty levels from nearly 50 percent to below 10 percent. Its success is due in large part to government action – via a safety net to lift those at the bottom to a more manageable level with the help of leaders who lead by example.
In 2002, Uruguay fell into one of the worst financial crises in its history, which was heavily influenced by the Argentine depression and the Brazilian Financial Crisis. That year, unemployment shot from 10 percent to 18 percent, GDP fell by 11 percent, and poverty in Uruguay doubled. By the time 2004 came, the poverty rate in Uruguay had reached a peak of 39.9 percent, of which children made up almost 60 percent.
Thanks to the implementation of new governmental policies targeted at improving the quality of life of its citizens, poverty in Uruguay fell to 9.7 percent in 2015, and its GDP grew to $56 billion. One of the reasons for this turnaround was taking care of Uruguay’s weakest and most vulnerable first, via the Emergency Social Program. Enacted in 2005 by then president Tabare Vasquez, it provides the safety net necessary to slowly lift the citizens of Uruguay back to their feet. An allowance program was also created during this time, providing families in poverty a means to live – 700 pesos a month (on average), or about $31.
After Vasquez, poverty in Uruguay continued to fall during the term of Jose Mujica – “The World’s Poorest President.” Mujica was the president of Uruguay from 2010-2015 and did not live in the presidential palace, but instead on a modest farm outside the capital city. He donated 90 percent of his earnings (about $12,000 per month) to charity and the people he represented and is quoted as saying, “I’m not the poorest president. The poorest is the one who needs a lot to live.”
Uruguay has experienced a drastic turnaround since its economic crisis due to economic growth, introducing social safety nets and strong leadership from the presidents who governed during this time. It still utilizes high levels of social spending and agricultural exports, and current projections are that Uruguay’s growth will continue to climb in the coming years, leaving the high rates of poverty in Uruguay a thing of the past.
– Dustin Jayroe