The GOU has liberalized some telecommunications, but basic telephony remains a government monopoly. Labor unions are collecting signatures to calling for a referendum against further liberalization, and have gained support from the chief political opposition party, the leftist Frente Amplio. Government Role in the Economy Uruguay's economy is based on free enterprise and private ownership, although investors are often faced with cumbersome bureaucratic procedures. The government owns, outright or partially, companies in insurance, water supply, electricity, telephone service, petroleum refining, airlines, postal service, railways, and banking. These activities generate about 18 percent of the gross domestic product and employ a similar percentage of the total labor force.
Privatization is widely opposed.
The GOU intends to foster economic efficiency through demonopolization and cutting red tape. A budget law approved on February 2001 provides for demonopolization of telecommunications and certain insurance, but basic telephony remains a monopoly. It also creates the framework for regulatory offices for telecommunications and electricity, and levels the tax treatment of public and private firms. Previous administrations have given the private sector access to areas formerly reserved for the state such as insurance and mortgages, road construction and repair, piped-gas distribution, water sanitation and distribution, cellular telephony and airline transportation. A law on energy sector reform that allows for the private generation of energy was approved in 1997.