Estrades and Amábile | Uruguay’s lessons for building a care economy

As populations age worldwide, the demand for care services is reaching unprecedented levels, presenting complex challenges for all societies, but particularly those in the developed world. This is also true for Uruguay, where the demographic profile is closer to that of North America and Europe than to its regional neighbours.

A sharp decline in Uruguay’s fertility rate underscores the urgency of addressing care needs across all age groups. Remarkably, Uruguay has achieved the region’s lowest poverty rate among the elderly, largely owing to robust social-security transfers. But poverty rates among the youngest population cohorts are nine times larger than for the oldest [see chart one].

In response to growing demand for care services, Uruguay implemented its National Integrated Care System, or SNIC, in 2015. The goal was to provide universal coverage of social and health care for vulnerable groups such as children under 13, people with disabilities, and older adults with dependencies. After almost a decade, however, the SNIC faces serious challenges.

Public coverage for adults over 65 and individuals with disabilities remains low, at a mere 15 per cent, and significant gaps in coverage persist for people aged 30 to 79 with severe disabilities and for children aged zero to three, over 30 per cent of whom receive education in specialised daycare centres. While public coverage has increased to 57 per cent for this age group since 2015, much of the improvement reflects declining birth rates, rather than enhanced service provision.

Crucially, the burden of unpaid care falls disproportionately on women, especially those with lower levels of education and income. Women not only dominate the informal care sector, but also bear the brunt of caregiving responsibilities within households, which often restricts their participation in the labour market. The largest gender gaps with respect to care time are found in homes with children under 12 [see chart two].

In the paid care sector, where 94.9 per cent of workers are female, conditions are marked by informality, underemployment, and lower salaries compared to the national average. Care and domestic workers have fewer years of education than the average worker, and in the private care sector, their services do not represent a significant proportion of their clients’ (mostly middle and high-income households) budgets. Such disparities underscore systemic inequalities that must be addressed to ensure fair labour practices and better support for care workers.

While the SNIC has made strides in recognising care as a right and highlighting the socioeconomic impact of caregiving, its effectiveness depends on increased funding and expanded coverage. For the past five years, its budget has been stagnant as a share of GDP, despite the need for increased resources to bolster early childhood education and extend care services to all vulnerable populations, thereby alleviating poverty and promoting inclusive growth.

The case for providing these resources is strong. Investing in early childhood education not only benefits children’s development but also enhances long-term productivity and economic outcomes. Improvements on these benchmarks are essential in the face of a falling fertility rate and shrinking child population. By integrating policies that extend parental leave and promote gender equality, Uruguay could further empower women in the workforce, promoting increased labour-force participation.

Uruguay’s experience underscores the broader need for a comprehensive approach to care that promotes gender equity and social inclusion in both the public and private sectors. By emphasising such reforms, Uruguay would meet its own immediate care needs, as well as setting a global example for how countries can build more resilient and inclusive societies in an era of demographic change.

Improving the living conditions of the youngest age cohorts is crucial, lest the next generations of workers fail to integrate into the labour market and support the social-security system through taxes. Investing in early education for the most vulnerable population has been shown to benefit children’s health, behaviour, cognitive skills, and school outcomes in the short run, and to improve their labour market outcomes and productivity in the long run – especially when followed by investments in education later in life.

Moreover, by expanding care coverage and adopting other policies not currently included in the care system – such as an extension of parental leave – Uruguay could encourage greater women’s labour force participation, especially among more vulnerable populations. The public care sector has much potential to absorb this cohort, and if an expansion of care services is accompanied by quality controls and capacity building, working conditions could be improved in the process.

Finally, promoting policies that reinforce the role of both parents in raising children not only benefits women but also fosters closer bonds between fathers and children. Likewise, policies aimed at changing traditional gender norms will contribute to a more equitable distribution of domestic work within households, thus reducing the time poverty suffered by women.

All told, Uruguay’s experience with the SNIC offers valuable lessons for policymakers worldwide. All should be focusing on care as a social imperative, investing in early childhood development, and advancing gender equality – not only for ethical reasons, but because it is essential for sustainable growth.

Carmen Estrades is Associate Professor of Economics at the Universidad de la República in Uruguay. Florencia Amábile is Assistant Professor of Economics at the Universidad de la República in Uruguay. © Project Syndicate 2024 www.project-syndicate.org