Uruguay Economic Conditions

The economy

Uruguay is primarily a country that exports agricultural products: meat, grain, soybeans and timber. Being a commodity exporter is a historical characteristic of most Latin American economies. The Uruguayan model is considered by many to be a successful model. With a small population, export business is very important. The foremost recipient of the export products is the countries of the Mercosur trade bloc, but despite this, the balance of payments to these countries is negative.

Latin America is not the poorest region in the world, but still the region with the greatest inequality. This will be an underlying factor for the country’s current level of welfare and future development. According to the United Nations Economic Commission for Latin America and the Caribbean (CEPAL), inequality in the distribution of wealth in the region has decreased continuously over the last decade. In this context, Uruguay has the lowest poverty rate and the best distribution of wealth. The average income of the 20 percent richest in the population is 7 times higher than the income of the 20 percent poorest. In comparison, the income of the 20 percent richest in neighboring Brazil is 21 times higher than the income of the 20 percent poorest. In Uruguay, the 20 percent richest are left with 36 percent of revenues, while in Brazil the same percentage remains with 54 percent.

Despite a slight slowdown in economic growth since 2013, the Uruguayan economy has largely seen a positive development. The purchasing power of the poorest has increased significantly: a 120 percent increase among the poorest quarters between 2009 and 2013, compared to a 40 per cent increase among the richest part of the population. Unemployment is also very low (between 5.5 and 7.5 percent) and real wages have increased throughout Frente Amplio’s reign. This, together with the effect of wage policy on inflation, is among the biggest tensions in economic policy. Productivity levels in Uruguay have reached the peak soon, and the fact that wage increases have been higher than the increase in productivity is highlighted as an explanation for inflation. At the same time, wage negotiation policy is a central part of the left-wing political project, and it has helped to redistribute wealth to the workers. This increased purchasing power in the working class has resulted in increased demand for goods in the domestic market, which has contributed to economic growth.

Wage growth will be even more important if the international context after 2012-2013 is taken into account, where the prices of agricultural products have ceased to contribute significantly to economic growth. The Uruguayan economy is more dependent on internal consumption. The main problem is that the national market can no longer sustain growth without falling into imbalance, as the increased inflation shows.

Expectations for continued positive growth remain, but there is cause for concern. Economic analysis shows that one of the bottlenecks to growth in the Uruguayan economy is that it will take a long time and it will be very costly to educate the population to the level the development requires. In addition, the majority of the other productive factors have soon reached their limit.

There is a consensus that the national infrastructure must be improved, as the current state can slow growth, exports and make production costs in the country more expensive. As a result, Vázquez started several major road network improvement projects early in his second presidential term, which is the foremost transport year for products to the country’s ports. Investment in electricity, rail and infrastructure in the ports is also needed.

Resident concerns

If the ordinary Uruguayan is asked what concerns them, three issues are highlighted: the security, education and housing situation. This has been achieved by the government, and it has prioritized these issues for several years already.

The security issue is central, both for the population and for the authorities. Official figures show that violent robbery, the most common criminal act in Uruguay, has increased by 8.1 percent between 2012 and 2013. Despite some improvement in the security situation and in the prison system, this is not considered sufficient and the authorities have been exposed to strong criticism. It should also be mentioned that both national and international organisms have repeatedly warned of human rights violations in the prison system, including torture and ill-treatment.

Still, the opposition’s bill to lower the criminal age from 18 to 16 went through in a referendum at the 2014 election. This was held after the opposition had collected the required number of signatures. The project met a lot of resistance from the families of young prisoners, former officials, international bodies, the National Institute of Human Rights and the Ombudsman. Still, the bill was passed with 47 percent of the vote. This shows that large sections of the population believe that stricter penalties and the opportunity to imprison young people are worth it if it reduces crime. Probably this feeling is reinforced by the fact that there are very many weapons among civilians. It is a known fact that easier access to weapons leads to more conflicts being resolved with violence.an intolerant and violent climate that has become part of the everyday lives of most people in Uruguay. There is a growing acceptance of all forms of violence, less openness to peaceful ways of resolving conflicts, and a lack of respect for human life ”.

The other major concern of the Uruguayans is the education system, where the country scores poorly despite increased investment. It is important to emphasize that since the return of democracy in 1985, more and more people have access to education, and previously marginalized sectors have been included. Despite this, several sectors of the population are still excluded from the education system, both for internal and external reasons. The internal causes include the structure of the curriculum and the academic regime, while the external ones include poor advice, lack of family support and the need to work. Several action plans have been implemented to support these sectors. It is necessary to extend these plans and at the same time make them universal.

In its first report on the status of the education system, the National Institute for the Evaluation of Education points out that there have been improvements, but that the numbers for the number of people completing secondary school and high school are still very low. Uruguay is among the countries of Latin America with the worst completion rate. The report further states that there is a need for a thorough review of the purpose and relevance of the knowledge learned today. Both students and other actors require that they be taught a smaller academic curriculum that is more relevant to the working life and the community outside the school. During Mujica, attempts were made to strengthen vocational education. His plan was to give more autonomy to the institutions that usually offer this kind of education, but he gained neither a majority in his own party or from the opposition.

Changes in teacher education and better management are highlighted in the report as important steps. Implementing reforms in the educational system in Uruguay is a costly and slow process, and this has faced a lot of criticism. This slowness is due to the many actors with a variety of interests involved in the decision-making process of the education system: the authorities, teachers and professors, technical staff, parents and pupils. This is confirmed in the report which points to the need for better mechanisms to create consensus that can lead to long-term change.

The third thing people are worried about is the housing situation. In 2010, Plan Nacional de Integración became Socio-Habitacional Juntos designed. The government declared that the country was in crisis in terms of housing policy, with over 15,000 homes in precarious constitution. Plan Juntos addresses the housing problem in the poorest sectors. The goal is to provide housing and regulate housing development in slums in cities, based on donations. However, the fund has received little public funding, and has also failed to raise donations from private and public actors. Mujica has stated that the plan could have been implemented faster. The challenge now is to succeed in coordinating the interaction between the various plans that currently exist for housing policy, in order to achieve increased efficiency. After becoming the party’s presidential candidate, Tabaré Vázquez announced several measures, including the construction of 38,000 homes during his term. These will reach the 38,000 most vulnerable families living in areas where basic needs are not met. In Vázquez’s first presidential term (2005-2010), around 20,000 homes were built through national housing plans.

Environmental Challenges

The Mujica government was also met with demands from the environmental movement, which mobilized against the enacted law on large-scale mining. The critics of large-scale mining in open-pit mining have complained that the mining company involved in iron mining, Aratirí, is receiving special treatment from the government. They also point to the negative consequences for the environment, the landscape and the local communities. Despite this, the authorities went ahead with the project and approved the law which allows for expansion of the mining industry in the country. However, few concrete investments have been made, and the project is currently suspended. This creates uncertainty about the future of the project and the planned infrastructure around it. The most important planned work here was a deep water port in the county of Rocha. This work has also met with great local resistance.

In 2015, there have been many concerns about water pollution, as a consequence of the frequent use of fertilizers and pesticides in large-scale agriculture. This form of farming has become increasingly common in Uruguay, especially after the boom in soy production in the last decade. The bloom of algae and cyanobacteria, including some toxic varieties in the surface of lakes and dams, reached the water uptake in 2014 at some of Montevideo’s wastewater treatment plants and in 2015 the most populous part of Maldonado. The problem became public when the drinking water in people’s homes became unclear and smelled bad. The authorities have begun to implement measures to improve the situation, and the plan is to introduce stricter regulation of land use and the use of fertilizers and pesticides. They have also announced that the fines for water pollution will increase significantly.

There is an ever-growing overlap between environmental issues and political issues, but despite this, none of the major political parties have taken these issues seriously. Frente Amplio, for its part, finds it difficult to talk about environmental considerations when this contradicts your development model, which is based on industry and extraction of natural resources.

Human rights

In 2008, the National Institute for Human Rights and the Ombudsman were established by law. An institution, the National Prevention Mechanism, was also created to avoid violating the human rights of people deprived of their liberty, including prisoners, people in custody, or others who are not allowed to leave the institution they are at. There have been several reports of violations of the rights of these people, both within the prison system and at private and public health institutions.

In February 2015, the Committee on the Rights of the Child presented its final observations on the status in Uruguay for the implementation of various protocols dealing with children’s rights. The foremost concern is the growing proportion of children living in poverty, a phenomenon that has been analyzed for years without being able to slow growth. The same children are also victims of various forms of discrimination, such as lack of access to education for disabled children and the increase in the number of arrests of minors. In connection with this type of arrests, there have also been allegations of torture and police violence at centers for minors. Specialists also point out that social penalties and other alternative methods of punishment are not used adequately.

Lack of transitional settlement

In January 2015, the International Law Commission published a report on Uruguay entitled Uruguay: La lucha por Verdad y Justicia en la encrucijada. The report examines the current situation for the legal processes for obtaining truth and justice about human rights violations during the last military regime (1973-1985). During this period, the regime practiced state terrorism, killing, torturing and imprisoning political and social activists, abolishing rights and freedoms, introducing censorship and kicking public servants. The victims now demand that the state take responsibility for judging and punishing those responsible for these horrors, and provide restitution to the victims.

However, there are still parts of society that oppose this. The said report expresses concern over repeated attempts by various sectors of the government to impede the work of truth and justice. The report states that the judicial process has stagnated, and the government, and in particular the Ministry of Defense, is accused of not fully cooperating in the investigation that is still ongoing. This has led to parts of Frente Amplio demanding the departure of the Minister of Defense. Furthermore, it is said that the Uruguayan Supreme Court has issued a number of decisions that violate the obligations the country has undertaken by ratifying international human rights treaties.

According to Countryaah.com, Uruguay has made great strides in both human rights and social justice, and cannot accept a legacy of impunity, silence and ignorance for the victims of the military regime. During Vázquez’s first presidential term, several advances were made with regard to the recovery of victims and the investigation into de facto regime crimes. One of the first steps Vázquez’s current government took was to issue a decree establishing the Truth and Justice Working Group. The mandate of the working group is to investigate and gather information on crimes against humanity during the period 1968-1985. It is of great importance that the period between 1968 and 1972 is now included in the investigation. These are the years when the authoritarian government of Jorge Pacheco Areco ruled the country, the man who took over when the elected president Oscar Gestido died. This was a government that abused the power the constitution gave to suspend individual rights, crack down on social unrest and suppress the national liberation movement the Tupamaro guerrilla. The writing press was censored, as for example the newspaper Ocapoca, where Eduardo Galeano was editor, and weekly newspaper El Sol. Several political parties on the left were banned, including the Uruguayan Socialist Party. The prevalence and frequency of the use of these exceptions led to the population becoming accustomed to abuse, authoritarian arrogance and the absence of rights. In 1971, the Armed Forces began “the fight against the rebels”.

The working group will also investigate the crimes against humanity perpetrated by state agents or others who committed such crimes with state approval or support, in light of state terrorism and the state’s illicit acts both within and outside the country. “Their actions will help shed light on these events within the framework of a rule of law and on the basis of international norms and standards of truth, justice, memory and guarantees of non-repetition,” the decree states. The working group will gather and systematize available information on litigation and other official and unofficial research, as well as propose measures and relevant guidelines for the government to ensure access to information. The same working group will also be responsible for establishing and maintaining registers that ensure access to information. It will pay special attention to inquiries from individuals or civil society organizations that have previously been wholly or partially denied this type of information. Similarly, it will also work specifically with individuals or organizations that have knowledge of documentation that has not previously been known. Under the various Frente Amplio governments, the laws on access to public information, the protection of personal data and the national system of archives have been passed. All these new laws now enter into the framework of the work of the Truth and Justice Working Group and enable a democratization of the process of publishing the archives.

There are many challenges that need to be addressed before Uruguay can become a country with more equality, more rights, better educational opportunities and the necessary institutional framework that comes with this to be possible.


Capital: Montevideo
Population: 3.4 million (2016).
Life expectancy: 77.2 years (2016)
Infant mortality: 8.5 per 1000 (2016)
GDP per capita (PPP): US $ 21,600 (2016).
Religion: Catholicism 47.1%, non-Catholic Christians 11.1%
Official languages: Spanish
Currency unit: Uruguayan pesos
Main export items: Beef, soybeans, cellulose, wood, rice, wheat, dairy products and wool.
Regional relations: Member of Mercosur, CELAC, UNASUR and OAS