Privatisation, Healthcare and Social Movement in El Salvador: Solidarity brings victory Ranja Sengupta

It is an irony that most world leaders do not practice what they preach around the elections. The President of El Salvador, Francisco Flores, of the rightist Nationalist Republican Alliance (ARENA) is no exception. On June 1, 1999, when he was sworn into the presidency, the first promise he made to his strife torn, catastrophe ravaged country was to provide more employment. “The foremost and most urgent requirement of our government is to promote jobs,” However, the next few years saw him embark on a path of privatization and trade negotiations that would result in massive job cuts. And this move was to affect with maximum impact, the most basic and crucial of all sectors, health and medical care. It also brought about the largest protests in the recent history of El Salvador, protests that were to continue over the next nine long months.

The recent upsurge in protests marked its beginning in September, 2002 when healthcare workers and doctors went on a strike to protest the closing down of the main hospitals that run under the aegis of the Salvadoran Institute of Social Security (ISSS), the institution that is responsible for running the country’s public healthcare system which provides free healthcare and social security coverage to all organized workers in the country. The closure included the leading cancer hospital of the country. The protests were started by members of the hospital workers union (STISSS) of the Salvadoran Institute of Social Security along with the social security doctors union (SIMETRISSS) from the public hospital system.

The move to close down public hospitals was a culmination of government efforts to extend privatization and opening up of the economy. Already major foreign private investments, mainly by US companies, have taken place in the sectors of electricity and telecommunications. It is also widespread in the financial sector. Attempts to privatize the health sector had been initiated even earlier in 2000, but protests and strikes had soon ended that process. This particular effort emerged as a result of the proposals presented by the National Association of Private Business (ANEP) during the Second National Encounter of Private Businesses (ENADE). The ANEP suggested these proposals ostensibly for gearing the economy towards the so-called modernization of healthcare services and the concession of auxiliary services in medical facilities.

The keenness of the government to follow through with these proposals reflected not only a rightist inclination to agree with the Washington Consensus but also private gains. ARENA’s significant efforts to dismantle the public sector, even in key areas, stem from a desire to make El Salvador attractive to the foreign investors. In the context of the coming Central American Free Trade Agreement (CAFTA) negotiations, which in the name of free trade, intends to open up even the public sectors of the Central American economies to US investors, the former has become imperative for the government. Of course, it can simultaneously ensure future incomes for itself. Ironically, the privatization process has included private companies owned by the Minister of Health though it is illegal for ministers of the Salvadoran government to benefit from such contracts. And this appears to be the rule rather than the exception.

The proposals by the ANEP, enthusiastically followed through by the Flores Government, not only threatened the employment conditions of healthcare workers but also proposed a withdrawal of subsidized and cheap healthcare facilities that were provided by the system. The limited privatisation that had already taken place in this sector in several hospital departments, food and security services had seen costs rise substantially. This therefore, was much bigger than an unemployment issue; it affected the supply conditions of a crucial service that in turn affected a large section of the population. It threatened the average Salvadoran’s basic access to healthcare. These aspects were significantly stressed by SIMETRISSS and STISSS.

The strike continued with more workers and doctors joining each week and with larger areas of medical facilities being included. On October 23rd, 2003, the first white march (white – in solidarity with hospital workers and doctors) was organized and led by the STISSSS and SIMETRISSS. Estimates of protestors varied from 8,000 to 200,000 but there was no doubt that this march saw the transformation of the protests into a larger social movement with people from all walks of life joining in to defend their basic right to public healthcare. Many organizations, starting from those involved in the field of healthcare and human rights to those representing rural populations participated in the protest. Workers from other public sectors like electricity, transport and water, the other targets of privatization moves, joined in. STSEL, the union of Electricity workers had also been staging its own protests against the firing of its workers since March 2002. University students, women’s groups and churches were also a major presence in this and the following protests over the next eight months.

The protestors urged President Flores not to veto a legislative bill recently introduced in the assembly that entitled citizens to a State Guarantee of Health and Social Security, which would prohibit “the privatization, concession, purchase of services, subcontracting or any form that is intended to transfer to private entities the provision of services of public healthcare and social security.” The bill also stated that the Salvadoran Institute of Social Security (ISSS) and the hospital network and clinics of the Ministry of Public Health and Social Assistance “will be exclusively responsible for the provision of these services.”

The legislative measure was written and proposed by the National Conciliation Party (PCN) in coordination with representatives of the striking doctors’ union. The measure was approved in the assembly on October 17 with 49 votes, backed by the PCN and the Farabundo Martí National Liberation Front (FMLN). President Francisco Flores, however, announced on October 18 that he will veto the measure for “reasons of unconstitutionality,” and suggested that the approval of the bill was part of pre-electoral campaign strategies in anticipation of the elections scheduled for March 2003. The legislative assembly needs 56 votes to override a presidential veto.

In his turn, President Flores came up with an alternative plan on October 13 that rested on four main points: a consistent fee, widened coverage, an integrated healthcare plan, and freedom of choice. The proposed integrated healthcare plan offered to freeze the fees, increase the age limit of children to be covered under a healthcare plan, and widen the service network to include agricultural and domestic workers, independent workers and Salvadorans living abroad. It also offered to include many other facilities within the integrated system.

However the crucial flaw remained. The new proposal did not at all stop the invasion of privatization, especially into key public sector units. This proposal sought to make the ISSS nothing but a competition for the private medical institutions and a likely loser in the long run given the fact that it was sure to face declining incomes and financial reserves. The government was effectively proposing to transfer the administration and provision of healthcare services to private institutions. The attempt by the president was simply to appease the people while continuing with his agenda of privatization. This was acceptable neither to the workers and doctors, nor to the different social interest organizations represented in the protests. Consequently, the President was forced to withdraw the proposal from the Legislative Assembly on 31st October.

After this the government did not show much initiative in resolving the issue. However, a historic victory was marked when the legislation proposed by the opposition parties was passed on November 14th with the ruling ARENA party being the only one opposing it. This effectively overturned Flores’ changes to the state guarantee of health and social security and was an effective validation of the STISSS and SIMETRISSS charter of demands. The new law established as dominant legal principle, the state’s obligation to provide accessible quality health care to every Salvadoran near their homes, regardless of ability to pay. It also prohibited the privatization, concession, subcontract, felicitation, or transfer of any health care or support service to private companies, and called for all current concessions to be cancelled by the end of the year. However, this legislation was later overturned on the 9th of December by the back turn of the smaller right-wing party PCN, allegedly paid off by ARENA.

Despite the offer of $1500, ten times the monthly minimum wage, to every doctor who returned to work, the strike and protests continued. The objective was to rehabilitate fired workers and ensure the payment of withheld salaries as well as a guarantee of no reprisals against striking workers. Blocking bridges, roads and major factories, the protestors used many white marches and torchlight processions to voice their anger.

Finally, after a nine month long journey which saw all health workers being deprived of their salaries, the firing of many, large scale police brutality unleashed on strikers, and abeyance of all but the most necessary of medical facilities, an end to the strike came on June 13th, 2003. An official agreement was reached between President Flores and the striking doctors and workers. The agreement proposed to stall privatization efforts involving the health sector, re-instate fired workers and to let striking workers return to work without fear of reprisal. Although the agreement did not include a written promise by the government not to privatize the ISSS, which the striking workers had demanded, the freeze on hospital activity and the massive protests had already forced the executive to withdraw three draft laws it had submitted to Congress that aimed at partial privatization of the ISSS.

It is true that healthcare in El Salvador is grossly mismanaged, corrupt and in great need of an overhaul. But privatization is not the only answer to the problem. In fact in a country where more than 48% of the population lives below the poverty line and can hardly afford to spend on private healthcare, privatisation is not at all an answer in a sector that provides a crucial and basic service. And it is not that other kinds of reform in this sector are not possible or have not been considered in the past.

In March of 2000, in order to end a similar strike by healthcare workers, President Flores had commissioned a committee to create “the Proposal for Integral Health Care Reform.”  This committee was made up of representatives from the government, medical unions, and the private sector and included international healthcare experts.  The end result was a proposal which recommended sweeping reform, but argued for maintaining the public healthcare system to be complemented by some private services, when and where needed. However, this proposal was never implemented nor was it made the subject of public debate.  After the recent agreement on June 14th, it was agreed that this document would provide the basis on which further reforms of the health sector would be carried out.

CAFTA, Privatisation and Workers’ Rights

However, issues of concern in the health sector are by no means eliminated. The government gives indications that it wants to crush the strong health care workers’ unions, such that possibilities for such protests are eliminated in the future. It also helps to woo the foreign investor to invest in public sector units. Simultaneously the threat of private health insurance companies and HMOs is by no means eliminated.

However, the main threat remains embodied in the CAFTA or the Central American Free Trade Agreement that President Bush proposed in January 2002, in preparation for the Free Trade Area of the Americas (FTAA). Following the lines of NAFTA, the North American Free Trade Agreement, CAFTA is to be a union of the trading zones of the US with that of Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador and is to be finalized by the end of 2003.

The US already contributes more than 60% of El Salvador’s imports. The country has also been lowering its tariff barriers in compliance with WTO rules. Therefore a free market for goods has not been a problem for the US. However, over 80% of all Salvadoran exports are in intermediate or capital goods where tariffs have been zero or negligible. Most of the reduced or near zero subsidies have been in manufactured or bulk non-agricultural goods. Agriculture has not been a major recipient of US exports, a situation likely to change with the signing of the CAFTA.

The agricultural sector in El Salvador supports a huge 30% of the population of the country and small farmers are numerous. The livelihood impact of signing the CAFTA therefore would be severe. The country is already devastated by El Nino catastrophe, and Negotiations in CAFTA have in fact stalled over the issue of agricultural products. The US demands full access for its agricultural products, even while it uses bio-terrorism laws to block Central American products from crossing the Rio Grande. In the decade since NAFTA was signed, such laws have prevented Mexico from exporting even a single chicken to the US, while the Mexican chicken industry have been decimated by a flood of cheap US imports. The FMLN has warned that CAFTA would take away import protections and other tools to reactivate the agricultural sector that provides a living to more than a million Salvadorans. Meanwhile, resistance to CAFTA in the rural sector is growing, as more campesino (farmer) organizations join into strategic alliances with unions and other urban-sector organizations to resist the free trade agreement.

Given the fact that El Salvador has no industry to speak of, a destruction of its agriculture will force even more migration out of the country. As much as 20% of all Salvadorans, work abroad. Most of them, working mainly in the US, have no legal status and therefore, possess none of the workers’ rights they should have. Many of them are forced to work under pathetic conditions and accept wages much lower than given to legal workers in these countries. There is also the constant threat of deportation using which many employers exploit such migrant workers. By destroying the already vulnerable agriculture sector, the government would increase the number of such forced migrants.

In fact, as suggested by some proposed amendments to the healthcare programme, these migrant workers need to be included in the healthcare scheme as they are generally denied these benefits in the US. This brings the discussion back to the realm of healthcare – the scope of which needs to be expanded, rather than contracted under the dictates of the CAFTA.

However, more than free trade in goods, the main interest of the US lies in further liberalizing investment opportunities. Since free trade agreements supercede national law, a law against privatization such as the contested “State Guarantee of Health and Social Security,” which seeks to protect the people’s right to affordable quality health care, would likely be overturned by CAFTA’s chapter on ‘Freedom of Investment.’ Since CAFTA, as intendedd by the US, will likely not distinguish between private and public sector, no sector can be kept untouched from this provision, however basic and supportive it may be to the poor people of El Salvador. The privatisation of electricity and its subsequent regionalisation, are key components of the Plan Puebla Panama (PPP), the infra-structural mega-project covering the entire Central America and meant to facilitate trade between these countries and the US. After electricity and telecommunications, and now healthcare, privatisation of water is the next target in El Salvador’s government policy.

Additionally, CAFTA will most likely contain the Chapter 11 investor rights provision of NAFTA. This would allow foreign corporations to sue national governments for laws or regulations that were shown to have caused a loss in actual or even potential future profits. A secret tribunal whose members would be unknown to the public would hear such cases. Their rulings could not be appealed and would overrule existing local, state, and federal laws and international agreements on labor and human rights. Such elements of CAFTA would erode democracy and allow for decisions to be made behind closed doors that would affect the lives and well being of millions people.

Labour laws that govern basic rights of workers have been a major area of concern regarding the CAFTA. Human Rights groups have pointed out that these need to be ensured pretty strictly under the CAFTA rules. Other agreements such as NAFTA and the US-Jordan FTA include provisions like minimum wages regulations, certain basic conditions of work, compensation against termination of work, right of association and right to bargain collectively and to strike etc. The North American Agreement on Labor Cooperation (NAALC), attached to the North American Free Trade Agreement, was the first ‘labor side agreement’ to accompany a trade agreement.  However, its effectiveness has been limited partly due to the fact that it is a side agreement and not subject to the same enforcement mechanisms as the NAFTA. The CAFTA must include all these labour rights as well as provisions for strict enforcement of these rules. Noncompliance with labor standards should carry the same consequences as any other violation of the agreement. However, given the reality, it is unlikely that labour standards will get a heavy weightage in the deal.

El Salvador, it has been pointed out by many human rights groups, provides few labour rights in reality. Work conditions have been terrible, especially in the Maquilas (assembling or processing plants in the free trade zones), which produce largely for exports. Abuses including child labor, unpaid and excessive overtime work, wages below minimum legal requirements, and grossly inadequate safety and hygiene standards have been regularly reported. There have also been severe restrictions on union activities. An estimated eighty percent or more of the workers in this sector are women, and many of them suffer sexual discrimination, including pregnancy testing and firing of pregnant workers. The fact that many of these are actually owned and operated by US companies does not leave much scope for hope vis-à-vis the CAFTA.

Ironically, while the El Salvador government has been in a hurry to privatise public sector units (in compliance with possible CAFTA provisions), it has not attempted to properly implement any of these labour rights. Right to form unions is a basic right for workers, recognised by many other agreements such as the proposed CAFTA. It is also recognised by the Salvadoran labour code itself.  The Labour code specifically provides for ‘the Right of Association’ and the ‘Right to organise and Bargain Collectively’. However, the government seems to be moving in the exactly opposite direction. Police repression of workers has recently reached peak levels.

The resentment towards CAFTA is further fuelled by the fact that until now the negotiations are being conducted in secrecy and have not included any civil society groups. The fears of getting a raw deal is also heightened since the negotiating teams of the Central American countries are hopelessly ill equipped to counter the expert negotiating teams of the US.


While the people have come out victorious, if at least temporarily, the main victim of the strike has been the governing National Republican Alliance (ARENA), as demonstrated by the outcome of the March legislative and municipal elections. The seats held by the right-wing ARENA in the 84-member single-chamber Congress shrunk from 29 to 27, and the party lost its ability to form alliances that gave it an absolute majority. On the other hand, the leftist Farabundo Marti National Liberation Front (FMLN), which publicly supported the strike from the start, has 31 seats now, compared to 25 prior to the March elections, and is the poll favorite with a view to the 2004 presidential elections.

The fight against privatization in El Salvador does not stop here. The social movement that was triggered off by the long and determined strike of the healthcare workers has shown that these are not exercises in futility. Many other countries, including the US, have faced severe opposition to privatization of key public services, most notably in health. The Central American countries like Nicaragua, Guatemala are all facing massive protests against privatization threats posed by CAFTA. The protests are not only against privatization, they are also against a CAFTA that gives them disadvantages rather than advantages. But Salvadorans have taken protests to a greater level. By going without hospital facilities but still continuing to widely support the strike over nine long months, they have carried awareness of issues such as privatization and trade reforms to new heights and created a mass movement much broader and deeper in scope than merely a strike of workers within one sector.  Both the number of protestors in the marches as well as opinion polls has shown the extensiveness of the support among Salvadorans. Statistics provided by the UCA (Central American University ran by the Jesuits) showed that 89% of Salvadoran’s are against the privatization of health care and 70% supported the healthcare workers strike.

Considering that El Salvador has been the “good boy” under ARENA’s leadership – it has been privatizing its financial and industrial sectors with eager zeal, servicing its debt, and has also been diligently reducing its tariff barriers under the WTO regulations – the force of the protests against policies pursued by its government comes as an even bigger surprise and more of a blow for powers like the US. ARENA’s dismal showing in the recent elections also prove that no government can afford to take their peoples’ opinion for granted nor can imperialist powers expect meek governments to agree to their dictates and remain in power at the same time. For that the policies of extensive privatization and opening up must show direct and obvious benefits which, from the world-wide experience, they have failed to do.

Finally, the fact that the healthcare workers in El Salvador, despite their appeasement by the government, very much intend to be part of all future programmes like campaigns against the privatization of water, does indeed point to the fact that the social movement in El Salvador has touched a level that goes beyond narrow selfish interests. And it is here that the strength of the movement lies.