Seguridad social y competencia política

In Uruguay, like in other countries in Latin America, the management of the public social security programs has been frequently criticized. These programs have shown financial problems and high evasion and have been slow to adjust to the demographic changes. I argue in this paper that the poor management, the evasion and the inability to adapt to changing conditions were determined to a large extent by the old rules of the game. The public social security programs were administered with large degrees of discretion, both in terms of granting benefits and monitoring the contributions. I hypothesize that the whole society supported the discretionary social policy, because of the flexibility associated to this policy regime. The discretionary social policy was accepted as a substitute for the formal Welfare State that could not be organized. I also argue that the social security reform initiated in 1995 involved an institutional change that reduces the room for discretion in the system and put a halt to clientelism.