March 29, 2009 / 12:47 PM / 11 years ago

Immigrants cut costs to keep up remittances

NEW YORK (Reuters) - The meager pay Tembeni Fazo earns from occasional housekeeping work was never enough to support one household, let alone two, but now the U.S. recession is forcing the African immigrant to make more sacrifices.

People conduct transactions inside a Western Union branch in New York March 28, 2009. REUTERS/Eric Thayer

“If I don’t send money to my family, nobody will,” said Fazo, 30, who financially supports her mother, brother and son in Zimbabwe, none of whom have jobs in a country where unemployment is around 90 percent.

The burden of supporting family members abroad is weighing more heavily on immigrants in the United States, and many, like Fazo, are having to cut costs to keep up the remittances.

“Migrants are trying to stay on as long as possible and skipping meals or sharing accommodation with others to save money to send remittances,” said Dilip Ratha, lead economist with the World Bank. “A lot more hardship for them, but then every dollar saved here can mean a meal for many back home.”

But remittances are dropping despite the sacrifices.

The global rate of growth for such payments to developing countries slowed in 2008 after hitting double digits in 2007 and was expected to fall between 5 and 8 percent this year, according to the World Bank’s recent projections.

Francisco Lopez moved into a shared apartment with three other migrant workers to save money after he was laid off from his job at a power company eight months ago in Phoenix, Arizona.

Lopez, 43, has tried to find work as a day laborer but is barely able to scrape together $350 to send to his family in Mexico, a far cry from the $800 a month he would send during better times.

Jobs are particularly hard to find in construction, an industry hard hit by the recession and one with a high proportion of migrant workers. According to the Inter-American Development Bank (IDB), 17 percent of Latin American immigrants work in the industry.


For most immigrants in the United States, remittances are an obligation in good or bad times.

“It’s not an option not to send money,” said Fatou Diop, a Senegalese immigrant who works as a community liaison at African Services Committee, a non-profit group in Harlem, New York. “When it’s hard here, it’s horrible in Africa.”

Some immigrants appear to be dipping into their savings to keep the financial pipeline home going.

Cash savings among Latin American immigrants, for instance, dropped from $3,500 in 2007 to $2,500 in 2008, according to the Inter-American Dialogue, a Washington-based policy center.

“That’s why you haven’t seen as big of a drop in remittances in the past two quarters as you would have predicted given the unemployment,” said Francis Calpotura, the executive director of the Transnational Institute for Grassroots Research and Action, another non-profit group.

Audrene Rowe moved to Brooklyn, New York, from her native Jamaica three months ago in hopes of finding a job. But she has had not luck despite possessing a master’s degree in human resources and health services.

Rowe, 31, is using her savings to support herself and her 4-year-old daughter, who is staying with relatives in Jamaica.

Discontinued remittances can have dire consequences, including less spent on education and healthcare and other expenses that contribute to development and enhance quality of life.

“When there is a crisis like there is now, people spend more money on the daily necessities,” said Robert Meins, a remittances expert at the IDB.

Jose Pineda, 36, is among those who have been unable to keep up payments since losing his job as a landscaper — he used to send $200 a month to his wife and four teenage children in El Salvador.

“They have sold the car and they are now thinking of selling the house,” Pineda said.

Additional reporting by Tim Gaynor in Phoenix; Editing by Paul Simao

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