It has been nearly two years since Vice President Kamala Harris traveled to Guatemala to announce that she would be leading efforts to address the root causes of migration. Her program sought to bring $4.2 billion of new investment to northern Central America over four years. The first factory supported by this plan was an auto parts producer that opened in February 2023 along Guatemala’s border with Mexico in Ayutla.
But since Harris’s speech, in which she implored migrants to “not come,” immigrants abroad have sent home tens of billions of dollars to keep their family economies afloat, essentially keeping the economies of the region alive.
It is a paradox, as Abelardo Medina, an economist with the Central American Institute for Fiscal Studies, tells The Progressive, since the investments in industry do little to promote changes to the structures that push people to migrate.
“Since there is no structural change in the country’s [economic model], people simply do not find opportunities, and so they leave,” Medina says. “The nation does not have the capacity to promote a dramatic change in people’s living conditions.”
Families across the region have found more hope and support through remittances sent home. But so too have the governments and elites who refuse to develop new people-centered economies.
In 2022 alone, immigrants from Nicaragua, Honduras, El Salvador, and Guatemala sent home a combined $37.3 billion in 2022 alone. And the volume of remittances continues to increase.
Guatemala alone has already reached nearly $8 billion sent home in remittances as of May 2023. This continues a long trend as more and more Guatemalans seek to reach the United States.
“More and more, remittances are an important part of the consumption that is made of the domestic product [in Guatemala],” Medina tells The Progressive. “It is expected that it will be 19 percent of GDP, that is, we are about to reach 20 percent [of Guatemala’s GDP coming from remittances].”
He adds, “We are en route to be like El Salvador and Honduras where a quarter of their GDP comes from remittances.”
The economies of the region are maintained by these remittances.
The economies of the region are maintained by these remittances. The Guatemalan business community and government have increasingly acknowledged the importance of remittances and migration to the country, even including remittances in the calculation of the GDP in 2021.
“Without remittances, it would be a country with many more people looking for work,” Carla Caballeros, the director of Guatemala’s Agriculture Industries Council said in a radio interview. “People leave to improve their quality of life—opportunities that they do not find in Guatemala.”
Among the efforts promoted by the United States to stem migration are the promotion of entrepreneurship and loans for small producers. But there are incredible barriers to creating jobs and entrepreneurships in the region, specifically the threat of extortion and intimidation to small operations.
On top of this, as Medina points out, Guatemala is not producing enough jobs to meet the number of people entering the workforce. He estimates that the country would need to create nearly 17,000 new jobs each month in order to slow or stop migration and to limit the number of people entering the informal economy. At the moment, he estimates that the economy currently opens roughly 1,900 new jobs per month.
Young people are especially impacted.
“When people reach their productive stage, they can’t find a job,” he says. “And if they find a job, the job is not well paid because what is paid in the market is often not the legal minimum wage.”
While the United States has long promoted investment as the means of resolving the causes of migration from Central America, these causes are far more complex than investment alone can solve.
Among the push factors is the low pay for both formal and informal work. This is especially important because many families in the region rely on informal work—such as sales of items on the streets, or work in markets, or shoeshining. In Guatemala, the number of those working in the informal economy hovers well above 70 percent of total workers.
Added to this, in countries such as Guatemala, wages can vary due to legislation that permits different wages depending on the part of the country where a worker resides. In the department of Guatemala formal work starts at 3,416 quetzales per month with a yearly bonus, or a little more than $435, while agricultural work starts at 3,324 quetzales with the bonus, or just over $425, and maquila work starts at 3,144 quetzales with the yearly bonus, or just over $400. But for other parts of the country classified, these wages fall in each sector by around 100 quetzales, or about $13 each per month.
And all of this is dependent on the fact that the employer or the contractor complies with paying the minimum wage. In rural areas, it is all too common for contractors to pay as low as 20-30 quetzales per day.
This is most common in seasonal agricultural work, although these violations of labor law occur in other sectors as well. The African Oil Palm industry, for example, has been accused of exploiting workers on plantations, and of having excessive quotas for harvesting the fruits and processing the raw oil.
The United Nations has long expressed concern over these policies of differentiated wages.
At the same time, Guatemala has an extremely high cost of living due to the dependence on imports and an economy that is controlled by monopolistic families that do not permit competitive pricing and stifle competition.
According to Medina, a family must earn at least 12,000 quetzales, or a little more than $1,500, per month to meet their basic needs. This is about US $500 dollars more than the estimated cost of living for a family of five, according to the Guatemalan National Institute of Statistics, which often is accused of manipulating data to lower levels of poverty.
“When opportunities are very poorly paid, what you are really doing is pushing people to leave,” Medina says. “What is Guatemala's main export product? Well, I would say [it is] people.”