In recent years, Uruguay has been lauded as a success story in economic progress and poverty reduction. According to the World Bank, which has played an enormous role in supporting the Uruguayan economy in the past decade, poverty in Uruguay has decreased from 11.6% in 2020 to 10.6% in 2021.

Extreme poverty has nearly been eradicated, but poverty still exists in this Latin American country. The causes of poverty in Uruguay can be summarized in three major categories: lack of education for young children, the rapidly modernizing rural sector and discrepancies in economic status between men and women.

Most Vulnerable Population in Uruguay

A large majority of the impoverished population in Uruguay is made up of women and children. Children aged less than 15 make up a large percentage of the most impoverished sector. Further, rural families who fall in the poorest 20% of the population tend to have the largest number of children. This inverse relationship between family size and economic status contributes to the lack of nourishment and education available to the children in these families. Research performed by the Economic Commission for Latin America and the Caribbean revealed extreme learning deficiencies in children at the lower end of the socioeconomic spectrum.

The modernization of the rural sector has also played a large role in perpetuating the high level of poverty in the more rural regions of Uruguay. As rural production work is streamlined with the rise and availability of new technologies, those employed by rural producers are being forced out of work. While the more urban areas of Uruguay remain positively impacted by modernization, the number of rural workers who are finding themselves unemployed due to modernization is also on the rise.

In both rural and urban areas of the country, women make up a large proportion of the workforce. In fact, at 45.7%, Uruguayan women have one of the highest participation rates in the labor industry in all of Latin America. Still, the discrepancy in wages between men and women is enormous and one of the main causes of poverty in Uruguay. With Uruguayan women earning about 67% of men’s income on average, it is no wonder that women fall into the most impoverished sector far more often than men.

Women also continue to fulfill traditional obligations in the home, allowing them less mobility and less time to work for pay. As a result, single-mother households make up a large part of the poverty sector in Uruguay. There is certainly still much work to be done in restructuring agribusiness, education and wage disparity between men and women if the causes of poverty in Uruguay are to be addressed in the coming years. However, the progress that Uruguay has experienced in the past decade is no small feat.

Assistance From the World Bank

With assistance from the World Bank, the Uruguayan government has implemented a development process—a composite of loans, insurance, donations and informational exchange—that has had outstanding results. In 2013, Uruguay was ranked as a high-income country with the largest middle class in the Americas, at 60% of the population. Beyond economics, Uruguayan citizens have an extremely high level of confidence in their government, based largely upon low levels of corruption and governmental stability.

Overall, Uruguay is an anomaly in Latin America in terms of its financial independence and high level of equal opportunity for citizens. Though poverty still exists in the country, the prospects for decreasing it even further are extremely favorable as Uruguay continues to grow and prosper as an egalitarian and economically stable country.

– Bhavya Thamman

Photo: Flickr
Updated: May 27, 2024