Slow construction hits Mexican remittances

[mawilson 2,133]

Slow construction hits Mexican remittances

By Adam Thomson in Juventino Rosas, Mexico

Published: October 29 2007 19:58 | Last updated: October 29 2007 19:58

Ermelinda Guerrero’s refrigerator is a monument to a previous and more prosperous

era. Its huge gleaming bulk, with curved sides and a fat modern handle, dominates

her otherwise humble kitchen. It even displays the original sales sticker.

“I bought it four years ago when there was enough money for luxuries,” she says,

straightening the blue and white headscarf that frames her chubby face. “Things are

very different now.”

So different, in fact, that Mrs Guerrero no longer has sufficient funds to fill it or even,

sometimes, to buy meat. The days when she could go with her family to the local town

at the weekend to eat tacos are gone.

At first glance Mrs Guerrero’s changing fortunes – her income is roughly $300 (€209,

£146) a month now compared with more than $1,000 about two years ago – would

seem to have little to do with the ups and downs of the US housing market: she lives

in a small community near Juventino Rosas, a market town about three hours north

of Mexico City.

But her husband – and only source of income – works as a bricklayer in Naples, Florida,

and the rapidly softening US market has meant considerably less work for him and a

substantial cut in remittance flows for her.

“In the good days he could go to the beach on weekends and drink beer. Now he

wants to come home but doesn’t even have the $300 he needs for the journey,” she

says.

In recent months the deterioration in the US construction sector has had an increasing

impact on the more than $23bn in cash that Mexican migrants – both legal and those

without papers – send back to their families each month.

According to Jesus Cervantes, who heads the remittances department at Mexico’s central

bank, roughly 20-25 per cent of legal Mexican migrants are employed in construction in

the US. “It’s reasonable to assume that the same percentage applies for the

undocumented Mexican workers [the great majority of the estimated 12m illegal

immigrants in the US],” he told the Financial Times.

Since the second half of last year the growth in remittance flows has slowed to a trickle.

In the first half of 2006 remittances grew 23.1 per cent compared with the same period

the previous year, but during the first six months of this year remittances grew just

0.6 per cent year-on-year.

Rita Mejía, a 25-year-old mother who lives near Juventino Rosas, is suffering just like

Mrs Guerrero. Her husband left for the US six months ago because they could not make

ends meet in Mexico.

“He was earning 800 pesos ($75, €52, £36) a month and we were spending 300 for rent,

100 for water, 150 for electricity and the food bill varied between 300 and 400 pesos a

month,” she says. “It didn’t take us long to realise that he had to go.”

Today her husband works as a roofer in Oklahoma, but jobs have become increasingly

scarce even in the brief period he has spent there.

The US construction downturn is not the only reason for remittances’ slow growth this

year. Mr Cervantes believes a variety of factors have contributed.

They include the statistical effects of measures taken in 2000 to encourage banks and

companies handling remittances to register the flows with the central bank and, in

October 2002, regulations forcing them to do so.

“Before 2000 we always knew we were underestimating remittances,” he says. “The rules

produced a statistical growth because we were recording the flows accurately for the first

time but that is a more-or-less one-off effect.”

Other reasons for the reduced growth in remittances are the increasing difficulty Mexican

migrants have in crossing the border, and the crackdown on illegal migrants living there.

Mrs Mejía’s husband is a case in point. “He tells me that when he has work the police

patrol regularly and that he and his friends have to hide,” she says. “Just a few months

ago the police didn’t care.”

The combined effect of all of this, says Mr Cervantes, is not that remittances will begin to

fall but rather that the heady growth they have experienced in recent years will slow down.

The other is that families in Mexico who depend on plentiful – and hassle-free – employment

in the US construction sector are going to have to bite the bullet.

Mrs Guerrero is already resigned. “I’m going to have to sell one of my three cows to get

my husband home but there is no point in him being there any more,” she says. “There

is not enough work to justify it.”

Source - The Financial Times

[w¡n9Nµ7 §£@¥€r 123]

We should raise taxes on the rich.. these noble people and their noble nation must not be allowed to hurt any longer!

[Ban Hammer 13,346]

We should raise taxes on the rich.. these noble people and their noble nation must not be allowed to hurt any longer!

[Bootylicious!! 2]

Actually, that's kinda scary to me. Javi is a foreman for a construction company. If he were to lose his job, we'd be in big trouble. There doesn't seem to be a problem so far. The last house they just built sold for $1.4 million. I hope the housing market here doesn't take a turn for the worse.

[archie07 0]

No more beer on the beach!

[mawilson 2,133]

No more beer on the beach!

He probably could have saved $300 he claims to need for the trip home if he hadn't pissed it all away on beer.