Setbacks in democracy and development

Armando Pérez, Claudia Hernández, Jeannette Alvarado, Mario Paniagua and Rudy Romero
Social Watch El Salvador

Social development indicators show some progress, but not enough, and economic growth is low with no benefits reaching the poorest households. Civil society participation, an essential element in the promotion of inclusive social security reforms, has been threatened by the Special Law against Acts of Terrorism that adversely affects the exercise of rights to free expression and organization.

Theeconomic, social and political dynamic of Salvadoran society is generatingdeterioration in security and well-being to such an extent that academic sectorsclaim that the country is heading towards a “precipice”.

Year after year, unresolved problems with health, education, civil security,access to drinking water and other issues deepen the economic, social andcultural inequalities between a small group who hold economic and politicalpower and the great majority whose needs are not met.

On top of all this, approval of the Special Law against Acts of Terrorism hascriminalized civil protest and social organization.

Deteriorating economic condition of thepopulation

Extreme poverty and social exclusion constitute a violation of human dignitythat denies the right to economic and social well-being and to develop as humanbeings. Poverty reduction requires increased economic growth and reducedeconomic and social inequality. It is necessary to implement state policies ofwealth redistribution.

The Economic Commission for Latin America and the Caribbean (ECLAC, 2007)includes El Salvador in a group of six Latin American and Caribbean countriesthat it considers are able to reduce poverty and build more equitable societiesgiven a different income distribution model, which is feasible.

El Salvador’s economic growth rate is one of the lowest in Central America andbenefits from this growth do not reach the poorest households. Currently, out ofeach USD 100 generated, USD 62 remains in the corporate sector, USD 32 goes onworkers’ salaries and USD 6 on taxes.

In 2004 and 2005 El Salvador registered the lowest growth rates in the region(1.5% and 2.8% respectively) and in 2006 the second lowest (4.2%). In additionto this limited growth the trend for opportunities in the labour market has beentowards less secure types of employment, while salaries are low and the price ofpublic services has risen, all of which has reduced the quality of life andencouraged emigration (Concertaciónpor la Paz, la Dignidad y la Justicia Social, 2007).

The cost of the basic family basket (a family’s basic monthly needs in food,housing, education, health services, transport, etc.) was calculated at USD699.2 for April 2007. However current minimum salaries are: USD 174.24 in thecommercial and service sectors, USD 157.24 for maquila (assembly factory) workers and USD 81.46 in the agriculturalsector. To cover the goods and services of the basic family basket at least fourminimum salaries would be needed. Suffice it to say that average monthlyexpenditure on just drinking water, electricity and telephone services amountsto USD 64.05.

An improvement in economic conditions for the general population would requirepolicies to fight tax evasion, mainly on the part of big companies, and publicsector corruption. In the words of former US ambassador to El Salvador DouglasBarclay, “approximately 64% of taxes are not collected… If they were, therewould be more than enough money to improve things…”

Data from the Central Reserve Bank shows that in 2004 tax evasion amounted toalmost USD 2.57 billion and in 2005 over USD 1.3 billion. Of the latter, USD 702million represents corporate tax evasion and USD 600 million is value-added tax(VAT) that is charged but not remitted to the Treasury.

Half way to 2015, health in a poor state

Among the areas where minimal progress has been made towards the MillenniumDevelopment Goals (MDGs) in El Salvador is that of chronic and globalmalnutrition. The former fell from 22.8% to 18.9% (a reduction of 3.9 percentagepoints) and the latter from 11.8% to 10.3% (a reduction 1.5 percentage points)over a 10-year period (1993-2003) (UNDP, 2007). This slow rate of progress isdiscouraging.

The greatest progress has been achieved in child mortality reduction, mainly inthe 1990s after the armed conflict in the country. According to UNDP data,under-five mortality was 52 per 1,000 live births in 1991 and 31 per 1,000 livebirths in 2005. Similarly, reported data for under-one mortality was 45 per1,000 live births in 1991 and 25 per 1,000 live births in 2005 (UNDP, 2007).

In relation to these indicators it is significant that higher mortality ratesare to be found in rural areas where there is a high incidence of poverty and alack of access to basic services.

The maternal mortality rate in El Salvador is one of the highest in LatinAmerica. It rose from 158 per 100,000 live births in 1991 to 172 per 100,000live births in 2003 (UNDP, 2007).

Faced with this data, in 2005 the Ministry of Public Health and SocialAssistance (MSPAS) undertook a study that produced a figure of less than 72 per100,000 live births, but this research was carried out with a methodology thatprecluded comparison with data from previous studies. Even with this statisticalmanipulation the figures are high and the causes of death remain the same:poverty and limited access to reproductive health services.

The evolution of public expenditure on health demonstrates that this has notbeen a priority area for the government over the last 10 years. As a percentageof GDP, during the last decade investment in health rose from 1.3% in 1997 to1.7% in 2007 (Finance Ministry, 2007), a limited growth of just 0.4 percentagepoints and insufficient for meeting the health needs of the 80% of thepopulation covered by MSPAS.

Total expenditure on health from all sources rose from 8.8% of GDP in 2001 to11% in 2007 (Finance Ministry, 2007). The majority of this consists of privateexpenditure[1] on the part of privatecitizens who struggle to pay health care costs in a deteriorating economicsituation for families. This private expenditure represents 7.3% of GDP.

Corruption clearly exists in the health sector and involves high-placed officerssuch as the Salvadoran Social Security Institute (ISSS) Director and theMinister of Health.

In addition, a hospital reconstruction programme financed with loans approved in2003 has been abandoned. From a USD 169.4 million projected budget, by 2005 onlyUSD 15.23 million of work had been completed (9.5%) even though the plannedperiod of the programme was five years. Among the institutions adverselyaffected is the Maternity Hospital, the principal centre for women’s healthcare.

HIV/AIDS: fourth most common cause ofdeath

HIV/AIDS represents the fourth most common cause of death in the country. Onaverage four people are infected daily and thousands hide their condition forfear of stigma and discrimination.

Recorded HIV/AIDS infection rates have been rising since 1984 due to thecontinuing or increasing incidence of unsafe practices and to improvements indetection with the greater availability of free HIV/AIDS testing at a nationallevel (UNDP, 2007, p. 57-58). Recent data shows that in late 2006 there wereover 18,500 registered cases of infection but according to UNAIDS the level ofunregistered cases is high and the number of infected people could be between25,000 and 50,000.

The ISSS coverage provides care to more than 1,280 people in the form ofantiretroviral therapy, medical attention in case of opportunistic disease andattention during pregnancy to prevent infection at birth.[2]However, there is insufficient compliance with current procedural protocols, asporadic availability of drugs, sometimes caused by late delivery, and aconstant shortage of reagents for the CD4 cell[3]count test, all of which exposes many people to the occurrence, or increasedcomplication, of opportunistic diseases and to death.

Since 1994 there has been an ongoing debate aimed at finding a consensus forhealth reforms but now in 2007 it seems that this may fail. The Executive haspresented to the Legislative Assembly its proposed Law for the Creation of aNational Health System that, in contravention of a government commitment, hasnot been arrived at by consensus. According to the Civil Alliance against HealthService Privatization, this move responds to a service privatization agenda thatwould further extend citizens’ exclusion from health services.

The right to education now

Education indicators show progress in relation to 1990 when expenditurerepresented only 1% of GDP because the budget priority then was defence, due tothe armed conflict.

The most significant progress has been made in illiteracy reduction andincreased coverage for preschool and the first two cycles of primary education.However, stagnation persists in the level of education achieved, coveragedeficiencies for primary third cycle and secondary education, low qualitystandards and geographical and gender inequity. Current literacy programmes havereduced illiteracy, principally in the 15 to 24 age group. In 1991, 85% of thepopulation was literate and in 2005, 95% (UNDP, 2007).

When examining trends in education finance it can be seen that the total amountspent has increased from USD 471.2 million in 2002 to USD 527.5 million in 2007.However, the general trend as a percentage of GDP shows a decrease from 3.3% ofGDP in 2002 to 2.8% in 2006 and 2.7% in 2007. Average expenditure on educationin Latin America is 4.5% of GDP, while the expenditure recommended by UNESCO is6% of GDP.

The goals set in the National Education Plan called for an allocation of USD 558million in 2006 and USD 613 million in 2007, but combined actual expenditurefell short of this goal by USD 134 million in the first two years.

Endangered pensions system

The pension system in El Salvador was privatized 10 years ago. Thegovernment transferred to the Pension Funds Administrators (AFP) money that hadbeen paid in by workers, while maintaining responsibility for the pensions ofworkers who were over 35 in 1996 and who remained in the old pension system. Sixyears after this privatization a reform was introduced that raised retirementages. A person who previously could retire after a minimum of 30 years work nowalso needed to be 55 years old in the case of women and 60 in the case of men.

A study published in 2006 by Consensus for Dignified Employment in the Maquila(CEDEM) shows that the pension system is deficient in the economic and socialbenefits that it provides and is unsustainable in fiscal terms. Among thedeficiencies highlighted are: 1) the exclusion of informal sector and domesticworkers; 2) the high level of pension-related debt taken on by the state when ittransferred public system reserves to the AFP, which increased the public debtto almost USD 8.24 billion in June 2006; 3) even when a person stops paying intothe system, the AFP continues to charge a commission for administering his orher account, which adversely affects the amount of their pension at retirement.

One of the main problems with the pension system is the wrongful retention ofpayment instalments by employers who fail to remit them to the ISSS. In 2006 theAttorney General’s Office reported 748 cases of wrongful retention ofinstalments, with maquila companies being the most frequent offenders. A totalof 54 maquilas owed approximately USD 940 million to the ISSS, plus anadditional 10% in delayed remittance charges. The average debt per company wasUSD 4.4 million.

In 2007 the government has to pay out approximately USD 345 million to retireesbut does not have that money and the state’s debt is three times greater thanthe proceeds from tax collection. In June 2006 the debt was calculated at USD7.19 billion.

The government created a Pensions Trust Fund to pay pensions and the AFP hasauthorized the Multisector Investment Bank (BMI) to use money paid in by theiraffiliates to pay the pensions of retirees. The amount lent for 2007 was USD 345million.

Because the government has such a high level of debt it is likely to haveproblems with repaying the AFP, so the entire system is at risk and the futurepensions of affiliates are endangered.

Criminalization of civil protest

The fight against the causes of poverty and the promotion of inclusivesocial reforms in the fields of health, education and the supply of drinkingwater, as well as other initiatives aimed at improving the quality of life andincreasing well-being for the population, must be carried out from a nationwideperspective and with the broad participation of all sectors of national life,particularly the more impoverished and traditionally excluded ones. However,this participation is now under threat.

On 21 September 2006 the Special Law against Acts of Terrorism was passed. Thislaw has a clearly negative effect on citizens’ ability to exercise theirrights of free expression and organization, and has characteristics that areunconstitutional. According to human rights organizations and the Human RightsDefence Office itself, this law has created ambiguous criminal categories thatlend themselves to arbitrary enforcement and in its present form it criminalizessocial protest.

In fact, by July 2007, 14 men and women who are leaders of social organizationshad been arrested with an excessive use of force and are in prison because theypeacefully demonstrated against water privatization.


ECLAC (EconomicCommission for Latin America and the Caribbean) (2007). Report “Meeting theMillennium poverty reduction targets in Latin America and the Caribbean”.

Concertación porla Paz, la Dignidad y la Justicia Social (2007). “Evaluación sobre la gestiónSaca a tres años de su gobierno”. June.

FinanceMinistry (2007).National General Budget.

UNDP (United Nations Development Programme)
(2007). Trayectoriashacia el cumplimiento de los ODM en El Salvador”, Serie Cuadernos sobreDesarrollo Humano, No. 6, San Salvador, May.


[1]Out of this total, 1.7% corresponds to MSPAS, 1.7% to ISSS, 0.2% to the TeachersBenefit Association and 0.1% to Military Health Care, the remainder beingaccounted for by private expenditure.
[3]White cell lymphocytes that control the defence of the organism.

Representatives of Social Watch El Salvador member organizations (APSAL, FUMA, Consortium of Human Rights NGOs, CIDEP and MEC).