Guatemalan economy boosted by record $15 billion sent home by foreign workers | Global development
The amount of money that Guatemalans living abroad send home to their families hit record highs in 2021. Remittances reached more than $15bn (£11bn) in 2021, an increase 35% over the previous year.
This unprecedented increase has prompted experts to question the political will to tackle the migration crisis when remittances from the United States contribute so much to the Guatemalan economy.
The Biden administration has kept up the pressure on Central American governments to address the causes of migration, launching a four-year, $4 billion investment plan in the Central American country, as well as in Honduras. and neighboring El Salvador.
“[The political elite] don’t opt for migration, they won’t stop it,” said Paul Brière, a former congressional representative in Guatemala who headed the national congressional commission on migration. “They won’t make the effort to stop migration, they won’t make the effort to fight corruption, they won’t make the effort to fight inequality, they won’t make the effort to fight poverty, because they need them for the situation, they need these people to leave Guatemala.
Guatemala continues to have an extremely low minimum wage relative to the cost of living, which forces many to depend on remittances to survive, while elites benefit from low labor costs.
“The worst thing is that we are becoming a country dependent on remittances,” Briere said. “It’s a perverse system. [Migrants] are our biggest export product, when in my opinion that should be an embarrassment.
“It is an indicator of the great exodus from the country to the United States that has existed over the past 20 years,” added Pedro Pablo Solares, a lawyer and migration expert.
Remittances have notably helped sustain the Guatemalan economy during the Covid pandemic. In December 2021, the Chamber of Industry of Guatemala issued a press release celebrating the “historic” economic growth of 7.5% in 2021, of which remittances were the fastest growing sector. The second most important area of growth was exports, which increased by 15.4%.
Since 2014, the number of Guatemalans seeking to migrate has increased dramatically, in part due to structural inequalities and lack of job opportunities. According to Mario Arturo Garcia, a Guatemalan remittance analyst, in recent years banks have seen an increase of 200,000 to 250,000 new users each year and between 2 and 2.5 million remittance transactions each year. month.
There are approximately 2.9 million Guatemalans living in the United States, according to the Guatemalan Ministry of Foreign Relations.
For Guatemalan families living in poverty, money sent home allows them to survive and provide housing and education for their children.
Brenda Pérez, 25, lives in the village of Llano de Pinal on the outskirts of Guatemala’s second-largest city, Quetzaltenango, with her two daughters, aged nine and five. Her husband, Carlos, emigrated to the United States in 2019 hoping to earn enough money to build a house for his family and provide an education for his two daughters.
“The money he sends has helped us a lot,” Pérez said. “Here we couldn’t do anything, because of how little we are paid.”
Prior to her departure, Pérez’s husband earned 25 quetzales (about £2.40) a day working in agriculture, when there was work to be done. Since emigrating, he has sent about 3,000 quetzales home every month through his job at a restaurant. Pérez supplemented the money her husband sends with weaving that she sells for between 25 and 60 quetzales.
The money sent from the United States also helped the family pay for an internet connection so the girls could go to school online and buy food, which had risen in price.
“The price of everything has gone up a lot,” Pérez said. “Even electricity has become more expensive.”
As frustration with the rising cost of living grows in Guatemala, remittances and migration are relieving some of the pressure on the government. They mean that the Guatemalan state does not have to meet the social needs for education, quality infrastructure or health care in the country, all of which receive little investment from the state.
“The problem is that if people don’t have that escape valve, to emigrate, then obviously the internal conflict in Guatemala is on the rise,” Brière said. “Because by not providing even basic services to people, obviously that generates greater dissatisfaction with local authorities and with central government.”
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