Breaking the cycle: Growth, jobs, and the fight against child poverty in Uruguay

Did you know that 4 out of every 10 children in Uruguayan households face monetary poverty, multidimensional poverty, or both simultaneously? Despite Uruguay’s robust social protection system and having one of the highest levels of social spending in Latin America, around 320,000 children and adolescents are growing up in conditions of deprivation, according to UNICEF. To move beyond, families need more and better jobs: without sustainable employment opportunities for the adults in charge, many families will not be able to sustainably escape poverty.

A tale of two generations

Uruguay’s social contract has been remarkably successful in reducing poverty among older adults, and social assistance has played a vital role in protecting the most vulnerable households, especially in times of crisis. Yet, the imbalance is striking: Public spending per child is less than half that for adults over 60, and the monetary poverty rate among children is five times higher (29% vs. 6%), according to UNICEF.

While this reflects the country’s laudable commitment to protecting the old-age population, it also highlights a growing challenge: an aging society with a shrinking share of children. As the demographic dividend fades, ensuring that the next generation is healthy, educated, and productive is not only a moral imperative and a matter of child rights: it is a fiscal and economic necessity.

Better jobs: The missing link in child poverty reduction

The imbalance is not only demographic; it reflects the earning constraints of families with children, especially when only one parent works. Even though adults in most poor families with children have high labor market participation rates, they often do so in low-productivity or informal jobs that offer limited and unstable income. Even when social transfers help to cushion shocks, these mechanisms can only go so far. Families need pathways to sustainable livelihoods.

World Bank research shows that the number of adult earners in a family is a key determinant of poverty. Naturally, this is the case when there is only one adult with children (in most cases, their mother). However, one out of three households with children depends on a single income, even when there are multiple adults. This duplicates their chance of being in poverty, reflects existing barriers to women’s participation in the labor market, and also affects the country’s growth potential.

The World Bank incidence analysis simulated what would happen if 25,000 women currently engaged in unpaid housework entered the labor force (representing a 3 percent increase) and got employment immediately. This change would lead to a 25% increase in per capita income among the affected households and reduce their poverty rate by half. Furthermore, with more dual-earner households, fiscal revenues increase, social transfer dependency declines, and the gender income gap narrows.

Such results make a compelling case for policies that enable women’s employment through affordable childcare, flexible work arrangements, parental leave, and labor-market intermediation. In addition to their gender policy angle, these represent macroeconomic strategies to sustain growth and inclusion.

Investing in children: essential for development

UNICEF’s projections show that if Uruguay universalized key policies such as transfers (increasing both coverage and sufficiency), paternal and maternal leave, care systems, and food programs in public education, it could cut child poverty by two-thirds over the next decade. Such an expansion is feasible and would yield long-term returns by strengthening human capital, productivity, and fiscal resilience. Investment in children would increase from 5% to around 8% of GDP in that scenario.

As Uruguay transitions into a mature demographic structure, the urgency to act grows. Policies that expand family incomes and direct investments in children are complementary: one strengthens current livelihoods, the other secures future growth. Increasing investment in children and their families is crucial to ensure that all children can exercise their right to a dignified life, adequate housing, education and healthcare, but also to secure a prosperous future. Failing to invest in children now, through education, nutrition, and access to decent work for their parents, means limiting their opportunities to thrive in the future, and as a result, eroding the country’s future growth base.

Building pathways out of poverty

The message is clear: to end child poverty, Uruguay must keep investing in families, care systems, and opportunities that place children’s rights and well-being at the center of development. At the same time, it must create more and better jobs, particularly for women. Only by doing so can economic growth be both inclusive and sustainable.

Ending child poverty is, above all, about ensuring that every child can enjoy their right to a dignified life and reach their full potential. When families have stable incomes and access to essential services, children benefit today—and society benefits tomorrow, through greater inclusion, equity, and social cohesion.