In response to the massive exodus of migrants from Central America, the Biden Administration has proposed increasing investments in companies to strengthen the economies of Guatemala, El Salvador, and Honduras. But experts say this will not be enough to stem the tide of migration.
Guatemala is the largest economy in Central America, even ahead of Panama. But inequalities in the region have exploded, and the country’s minimum wage remains low.
In December, Vice President Kamala Harris announced that the Biden Administration had reached an agreement with seven companies—including PepsiCo, Peet’s Coffee’s parent company, and Parkdale Mills, a textile company—to invest in the region. Yet expanding maquila and agriculture labor, both of which are notoriously underpaid, will more than likely do little to resolve the root causes of migration.
“I honestly do not believe that these initiatives can effectively reduce migration,” Jonathan Menkos, the director of the Central American Institute of Fiscal Studies, tells The Progressive. “Migration is related to the lack of a State, of a public administration that offers guarantees of wellbeing and prosperity.”
With regard to Guatemala, as Menkos sees it, “the first problem or the most important of the structural problems is that there is practically no welfare state or not even a state at all. There is no state that provides education, health, housing, that creates conditions of political and economic stability.”
According to research from the Central American Institute of Fiscal Studies, the Guatemalan government in 2015 was spending only the equivalent of 45 cents in Indigenous communities for every dollar spent in non-Indigenous communities. Another investigation by the Guatemalan national newspaper, Prensa Libre, found that 50 percent of all abandoned public works projects are found in the largely Indigenous departments of San Marcos and Huehuetenango.
Guatemala is the largest economy in Central America, even ahead of Panama. But inequalities in the region have exploded, and the country’s minimum wage remains low.
Communities have largely relied on remittances from family members in the United States to cover the lack of investments by the state. Advocates argue that the new U.S. investments should be made at the community level.
“Investment should be done more at the local level and stimulate local economies,” Juan José Hurtado with the migration advocacy group Pop No’j, tells The Progressive. “Because if not, in the end the investments only benefit companies and not really the population.”
In fact, according to Hurtado, even increased job opportunities will likely not resolve the crisis.
“Here, the problem is always under what conditions [one will work]. It is to be exploited in a terrible way,” he says. “At the end of the year, the president announced that they were going to raise the minimum wage, but in any case that minimum wage does not compensate, it does not meet the basic cost of living.”
Shortly after Harris’s announcement, the Guatemalan administration of Alejandro Giammattei announced a 4.75 percent increase of the country’s minimum wage. The new monthly minimum wage, in Guatemalan quetzales, is now 3,209.24Q for non-agricultural labor, 3,122.55Q for agricultural labor, and 2,954.35Q for Maquila labor. All remain below the country’s basic cost of living, which sits at 3,300Q per month (about 428 U.S. dollars).
Guatemalans, Menkos explains, will have far more opportunities to support their families who live in areas of the country abandoned by the state by going to the United States to work.
“When comparisons are made, a Guatemalan migrant in the United States has an average income of over $45,000 a year,” he says. “While a Guatemalan worker among the 80 percent of the lowest-income workers earns between 400 and 2,800 quetzals a month, more or less. And the best 20 percent of the best-paid workers will receive about 6,000 quetzales a month, or about $10,000 a year.”
Guatemalans abroad sent $15.3 billion United States dollars home to family members in 2021, a historic record for remittances. Remittances from the United States continue to maintain families in the forgotten parts of the country.
This historic amount of remittances accounts for nearly 18 percent of the country’s Gross National Product, contributing to the 7.5 percent economic growth in the Central American country, which was celebrated by the Guatemalan government and the economic elite.
But the remittances do more than sustain families that are forgotten by the state; they also maintain the national economy and further cement the current system.
“If that flow did not exist,” Menkos says, “effectively the country would have to have an economic policy and try to innovate, improve well-being, the growth of the domestic market, of the middle class. But as long as remittances fulfill the function that these other elements would have, nothing much will happen.”
As it now stands, migration will continue to be Guatemala’s most lucrative export.
“This is an economic model based on the exportation of people. People are going to get out, no matter if they build walls or [implement] restrictions,” Menkos says. “There will always be thousands of people trying to get out of this suffocating reality.”