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Opinions on the government's economic plan

Proceso, No.649, 15 February 1995

Taking into account the nation's socio-political and economic context, the University Public Opinion Institute (IUDOP) of the Central American University (UCA) conducted a public opinion survey on the nation's political situation and, specifically, on the economic measures recently announced by the government. The survey was conducted between January 28 and February 5, with a valid sampling of 1,228 adults, both urban and rural, throughout the nation's 14 departments, using face-to-face household visits. The sampling was distributed proportionally by department, social class, and age and gender groups, with a possible sampling error of +/-4%. In this article, we will only address the opinions expressed on the government's proposed economic plan.

As a starting-point, the survey revealed that 58% of Salvadorans knew of the plan proposed by President Calderon Sol. The figures show that the proportion of people who had heard of the plan was higher as income levels increased. When those who knew of the plan were asked whether or not they agreed with it, 61.1% said they disagreed, while 19.5% agreed, and 19.4% expressed no opinion.

Along those same lines, 34.2% of those who said they disagreed with the proposed plan said it was because it would harm the standard of living of the poorest; 29% said it would increase the cost of living, and 12.4% said it would not solve the nation's economic problems. Furthermore, 51.1% of those who said they agreed with the plan said it would benefit the country, and 12.4% said something must be tried.

Those who said they had heard of the plan were asked, "Whom do you think the plan will benefit?" Most of the respondents said that only the richest would benefit (60.8%), while the rest said either that all would benefit (15.3%), or only the ruling party (14%). A breakdown by social class shows that the lowest-income population are more inclined to believe that the measures will only benefit the rich.

The survey also showed that most Salvadorans do not believe that the new measures will do anything to improve the nation's economy. One out of three of those surveyed believe that El Salvador's economy will not improve from the measures, and another one-third believe the improvements will be slight. Again, those who were most skeptical about the possible benefits of the plan for the Salvadoran economy were the workers, rural residents and urban marginalized population.

One of the measures initially announced by the government was an increase in the Value-Added Tax (VAT) from 10% to 12%. Although that measure was subsequently abandoned, IUDOP had included a couple of questions about the VAT in its survey. The results show that increasing the VAT would have been a highly unpopular measure. Around eight out of every ten Salvadorans (78%) are against increasing the VAT, even if it were used to finance social spending such as health, education or the peace process; only 15% thought it was a good idea to increase the VAT in order to finance more social spending. Those who opposed a VAT increase believe that the government ought to do a better job collecting existing taxes, should find other ways of financing, leave the VAT as it is, or use another kind of tax. There are two main currents of opinion behind these evaluations: in the first place, there is the conviction that an increase in the VAT will not necessarily translate into better social services; in the second place, most feel that increasing the VAT will seriously harm the people's already precarious standard of living.

With regard to privatizing State-owned enterprises, the IUDOP survey showed that one-third of those questioned (32.4%) believe that such a measure will particularly benefit the government; another one-third (31.2%) said that national businesses will profit the most from such a move. Only 14% feel that privatization will benefit everyone, and 8.6% think that international companies will profit. Only 3% of those surveyed feel that the employees of the institutions in question will benefit from the "modernization" and sale of State-owned businesses.

In an effort to obtain Salvadorans' opinions on the possible impact of the proposed economic measures on different aspects of national life, the survey included the following question: "In your opinion, will the implementation of President Calderon's economic plan will have a 1) very good, 2) good, 3) fair, 4) poor or 5) very poor effect on 1) national industry, 2) democracy, 3) agricultural production, and 4) employment and work in general. The results, as seen in the following table, show that the people see industry as the sector which will reap the most benefits from the proposed economic policies. It is also interesting to see that agricultural production and jobs are seen as the great losers under the proposed plan; we must recall that these categories are most closely related to the activities which most concern low-income sectors.

The impact of the proposed economic measures on different areas of economic life (%)
Impact on: Good Fair Poor N/A
Industry 42.8 28.0 17.7 11.4
Agricultural production 24.7 25.4 39.1 10.7
Employment 26.9 23.4 39.3 10.4
Democracy 22.5 30.0 32.0 15.5

The government has accompanied the announcement of its economic measures with the warning that all citizens must make sacrifices in order for El Salvador to "take off" economically and realize its full potential. IUDOP took that idea and asked all Salvadorans to define themselves with that in mind. Almost half (48.7%) defined themselves as "people who are having a hard time and cannot make any more sacrifices for the nation"; another 41.8% defined themselves as "people who are having a hard time but can sacrifice themselves a little more for the nation." The other 9.4% said they could "make sacrifices for the nation without any trouble" or "have no problems at all." A breakdown by social class shows that the poorest are the ones who say they cannot make any more sacrifices; the upscale urban sectors are the ones more willing to "make sacrifices" for the nation.

In general terms, the IUDOP survey shows predictable, coherent opinions by Salvadorans about the government's proposed economic measures. Contrary to the aura of acceptance the government is trying to portray around its proposal, the majority of Salvadorans who have heard of the plan are skeptical about it, and concerned about the possibility that economic conditions will worsen, both for the nation as well as for the people in particular. It is clear that the majority of Salvadorans, especially those who are hardest- hit by poverty, do not approve of Calderon Sol's plan and are convinced that it will enrich even further only a handful of Salvadorans, while impoverishing even further the majority of dispossessed.

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