The main benefit that an increase in minimum wage in Honduras can be the affect that it has on skilled and educated workers. Most of these people belong to the middle class workers or those people who are earning above the poverty line. It would benefit directly their net family income. It would increase the possibility that they could have greater savings and for them to create their own businesses (Gindling & Terrell, 2004, page 4-6). In the consideration of the current state of Honduras, there would probably less people who would received the increase in minimum wage that will still be willing to risk illegal immigration.
Thus, an increase in minimum wage can contribute to a decrease in the number of illegal immigrants, since what they could possibly earn in another country is also almost equivalent to the amount that they would receive in Honduras, minus the risk ( Katel, 2005). Increasing the minimum wage would also inspire people to finish their studies to be able to qualify for jobs or employment which offers minimum wage. It would also be beneficial for skilled workers and newly graduate employees since they could earn more than when they do not graduate or if they do not have enough qualifications as that of college drop outs.
Necessity and Relevance of Increasing the Minimum Wage in Honduras In the current working condition of the laborers in Honduras it is justified to increase their wages. These workers have been experiencing force labor and are subjected to poor working environment which might be hazardous to their health (Gindling & Terrell, 2004, page 5). It is necessary for the government to increase the minimum wage to be able to protect the workers from the alienation that the working conditions in Honduras working places could make.
In general, increasing minimum wage is relevant in giving the workers proper payment for their works. With regards to poverty, increasing the minimum wage is relevant to be able to get skilled and educated families out of poverty, especially since getting proper skills and education have require great sacrifice from their families (Gindling & Terrell, 2004, page 16). Remittances and Poverty in Honduras The Red de Desarrollo Sostenible(RDS) have pioneered a project in Olancho, Honduras to take note of the impact of the remittances from foreign investment.
According to RDS, in 2004, there are nearly 700,000 workers who live outside of the country to work. This group of workers have been able to send remittances to the family members they have left in the country amounting to more or less $1 billion. It is now considered to be the greatest source of income and investment. It provides more income than tourism. Thus, immigration and working outside of the country have been a popular strategy for the Hondurans to alleviate poverty (Red de Desarrollo Sostenible, 2005, page 1).
The organization believes that enhancing the remittances would be a better tool in alleviating poverty than raising the minimum wage, since it would not affect the labor market while increasing income for the families left behind (Red de Desarrollo Sostenible, 2005, page 1). There are no special legislations that are given to foreign investors in Honduras, actually, foreign and local investors enjoy the same benefits and incentives. The foreign and local investors both have to pay more or less eight municipal taxes, three agency taxes and thirty one central government taxes.
There are no time limits for foreign investors, they could continue to operate as long as their company remains duly recognize, that is, when the company is registered and pay proper taxes (Latin America and Caribbean Center, 2007, page 1). Honduras Foreign Debts and Disaster Mitch Honduras had an approximately $4. 5 billion foreign debt as of 1996. 90% of this debt amounts to the long term debt, 87% of which are public debt. Honduras annually pays more or less $564 million in 1996 (Latin America and Caribbean Center, 2007, page 1).
The Hurricane Mitch which destroys most of the agricultural production of Honduras in October 1998, have left the country with no choice but to cancel or suspend debt servicing to foreign debts in able to cope up with the destruction by rebuilding its economy, roads and infrastructure that was severely damaged by Mitch (Sica & Avina, 1999, page 1). This destruction has left people with no choice but to migrate to other countries in able to at least live. Thus, illegal migration has been a central problem after the hurricane. Most of the people from Honduras have fled to the United States illegally.