The Effect of Sending Countries on Remittance Flows

The economic situation of the countries where the migrant resides determines their ability to obtain employment and generate income, and as a consequence, affects the amount of remittances they can send each year. In this context, the employment and unemployment rates, as well as the wages of migrants in host countries, are indicators that largely explain the evolution of remittances to the region.

USA. Data from the United States labor market, the main source of remittances received by Latin American and Caribbean countries, show that after 2009, a year of turbulence in which the employment rate of Latin American migrants fell -3 .7%, in 2010 said rate grew only 1.7%, being insufficient to compensate for the jobs lost the previous year. During the first three quarters of 2011, the employment of Latin American immigrant workers maintained the positive trend, growing at an average rate of 1.3% in relation to the values ​​of the previous year. In the last quarter of that year, the employment rate was 3.5%, giving strength to the recovery of remittance flows sent from the United States.

(Graph 5: Latin American Employment and Labor Force in the United States (2007-2011))

Regarding the unemployment rate of Latin American migrants in the United States, as of the second semester of 2009 its evolution showed a favorable behavior. In fact, during 2011 unemployment showed negative rates of -7.4% on average. It should be noted that the Latin American and Caribbean migrant labor force has shown low annual increases since 2009, and in 2011 it increased by 0.6%, which contributed to the reduction in unemployment among migrants.

In general, the job prospects for migrants in the United States seem favorable in 2012. In fact, the data for the first month of the year show an annual increase in their level of employment of 7% and an unemployment rate that continues to decrease by -8 %.

(Graph 6: Average weekly wage of Latin American and Caribbean workers in the United States (2001-2011))

Additionally, during 2011 the average weekly wages registered an increase of 2.43%, reaching US$ 549 per week, which contrasts with a drop in 2010 of -1%. The foregoing, together with the improvement in employment (and decrease in unemployment), explain to a large extent the rebound in the flow of remittances received by the region.

Spain. Despite the economic uncertainty that European countries are going through, Spain remains the second most important source of remittances sent to Latin America and the Caribbean, particularly for many South American countries. In the case of Bolivia, remittances from Spain in 2011 even exceeded remittances from the United States.

Spain is home to 12.8% of the migrants in the entire region, especially those from the Andean countries. Latin American and Caribbean migrant men work mainly in the construction (27.3%), service (54.1%) and industry (12%) sectors, while migrant women are employed almost exclusively in the sector. of services (93.6%).

When considering the sectoral distribution of employment of the migrant population from Latin America and the Caribbean in Spain, it stands out that the Spanish construction sector is the one that was most strongly affected by the crisis since 2008, registering annual falls that were accentuated at the beginning of 2009 reaching -25.9%. During 2010, the increase in employment in this sector was understood as a sign of a possible stabilization. However, in 2011 the rates of decline were stronger than those of the previous year. For its part, the services sector seems to have been affected to a lesser extent, since the effects of the crisis were reflected at the beginning of 2009, and since 2010, the growth of employment in this sector has remained at rates close to zero.

(Graph 7: Employment in Spain by economic sector (2007-2011))

This sectoral behavior during the last years reconfigured the migratory flow of Latin Americans and Caribbeans towards Spain, since predominantly negative growth rates of the migratory balance were observed during 2011, with the exception of the months of October and September in which said flow presented positive growth rates. In other words, the number of migrants who emigrated from Spain in 2011 was greater than the number of migrants who immigrated to the country, causing a decrease in the total population of Latin Americans in Spain from approximately -1% to -2%.

(Graph 8: Monthly migratory balance (2009-2011))

The reduced activity in the construction sector in Spain and, consequently, the decrease in its demand for employment may explain the net reduction in the number of male migrants throughout the year. On the other hand, as a reflection of a certain stabilization of the services sector, the number of migrant women residing in Spain increased slightly, although not enough to compensate for the drop in the country’s male migrant population.

On the other hand, the income of workers in the construction and service sectors has shown stagnation since 2010. This trend, coupled with the drop in employment and migration, largely explains the reduction in remittances sent to countries. countries of South America, and mainly to the Andean countries, for which these flows represent almost a third of the total remittances received.

Leave a Comment