Woe in Welfarelcmd

After 50 years of cradle-to-grave welfare statism, little Uruguay is tottering on the brink of bankruptcy. The country is rich in wheat and beef but hardly rich enough to afford such goodies as 100% pensions at age 55, a 30-hour work week, and 44 days of paid vacation each year for many workers. And so in the past five years the peso has skidded from 9-c- to 1.6-c- on the free market (the official rate has been abandoned altogether). Thus far this year, inflation has soared 45% while the foreign debt has grown to a staggering $515 million.

Two months ago, in return for help from U.S. and international banks, the government finally agreed to try a little austerity--namely, to hold down wages and straighten out its finances. That only brought new clamors for wage increases, the most spectacular of which was a demand for a 48% boost by bank employees. When the government said no, the leftist National Confederation of Workers--500,000 in all-joined in a crippling general strike that forced the country's ruling nine-man National Council to declare a state of siege, which was not lifted until early this month.

The Council's attempt to hold the wage line is only the first tentative step to recovery. Uruguayan economists, with Alianza help, have put together a ten-year development plan which runs to 3,600 pages, calls for a sweeping reorganization of the country's social security system, sharp restrictions on imports, and increased agricultural production for export. Given the temper of Uruguay's 1,000,000-man work force, any steps at all may well prove impossible. Last week 130,000 government workers rejected a relatively reasonable 15% raise, walked off their jobs demanding a fat 60% wage hike.

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