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Low Spending High Aspirations


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This week we take up urban consumer segment G3, which comprises households whose chief wage earners are primary educated skilled workers, married with young children. Unskilled workers who are married with young children form segment H1 and will be analysed next week. The G3 segment is large – it is the fourth largest urban consumer segment with around 58 lakh households and 27 million people, making up 8% of the urban population. Household sizes are large, almost half of them have five or more members. This is because this segment includes both nuclear as well as joint families. All the households have children, as this segment has been defined by this characteristic, 40% have more than 2 children. While 90% of the households have no seniors, not only does this segment include nuclear families but also, with this educational profile, this is a segment that marries young and has children at a younger age. It would not be uncommon, in joint families, to have three generations, all below the age of 60, in an household here. This is a low income segment of course, the education level limits opportunities for these households. Almost two thirds of the chief wage earners have just about completed primary school, while the remaining have finished middle school (none have got past the higher secondary level), and the median household income is just Rs. 66,000. Although in a third of the households, two or more members are earning, education levels and skills are at the lower end for all adults. Quantum of savings is low as catering to the most basic necessities of these large families takes up most the budgets. Yet, 56% of these households own the homes they live in and the others are working their way up to achieving the same.

The chief wage earners in these households are typically second generation migrants, they have basic schooling and have learnt their skills through on-the-job training as apprenticeships in their younger days. The majority are in the age-group 25-44 years, and they form a very diverse group with respect to their employment profiles. A little more than 40% are self-employed, just 30% have regular salaried jobs while the rest depend on daily contractual work. Less than 10 % have jobs with large private or public sector companies, or with the government, the large majority are in the unorganised sector. The unorganised sector gives employment to three quarters of urban Indians and is indeed the lifeline to those with low education and skills. Over the past decade, employment in the unorganised sector has grown faster than in the organised sector, and with the spread of education, NSSO surveys have shown that this sector is also seeing a gradual reduction in the share of those at the lowest end. While there is an upgradation in the quality of workforce, the pace and levels still need to be ramped up significantly to generate higher household incomes.

Consumption levels therefore are at the lower end as well, the penetration of durables is amongst the lowest in this segment. Aspirations are however high, as the influence of media is very strong. This is a group that would want to move up as fast as it could, but is constrained by its lack of capabilities. Households do want their children to learn more and get better opportunities, however they run up against the poor education system in place currently. There appears to be change in the offing, that will hopefully make schooling more meaningful and make the youngsters from this segment more employable than the present older generation.

Published in: Business, Self Improvement
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Low Spending High Aspirations

  1. 1. Published: Mint dated 28 th June 2010 Indicus Consumer Segment