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The freedom of self-employment

The freedom of self-employment
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First Published: Mon, Apr 12 2010. 12 14 AM IST

Updated: Mon, Apr 12 2010. 12 14 AM IST
Last week we took up the smallest urban consumer segment, E1, which has young, single chief wage earners who lived in joint families and are school-educated businessmen. Keeping the education and occupation profile the same, this week we look at E2 households, where the chief wage earners are married, with no children, and live in joint families.
Also See Indicus Analytics Research (Graphic)
Yet another small segment, E2 households comprise those where the chief wage earners are mostly in the age group of 25-34 years, are school educated, married and live in joint families, but do not have children yet. With just over 80,000 households, this segment makes up 0.1% of the urban population.
E2 households are significantly different from those in the E1 segment, as the household size is larger and there are more earning members—nearly half the households have four or more members and 63% have two or more earning members.
Yet, the number of seniors are few: Just 21% of households have one or two seniors. Given the joint family set-up in this segment, this may seem a paradox. However, the younger age profile of the household members can be a reflection of low educational levels and early marriages. Moreover, joint families do not necessarily mean parents living with children, as the households could also include relatives or friends who have come to the city to study, work or train in some profession. In fact, though the chief wage earners do not have children, 22% of households have one or more minors.
The median household income is low at Rs1.45 lakh per annum and the bulk in this segment earns less than Rs3 lakh a year. Yet 15% of households earn more than Rs5 lakh per year, creating a small relatively affluent intra-segment group.
While all the chief wage earners in this segment are married, 40% live without their spouses—wives in the villages or smaller towns, waiting for the spouse to settle down or move out is one possibility.
Also See E2 Segment (Graphic)
House ownership is also lower in this segment when compared to E1 households—just 48% own their houses. This segment, therefore, forms a small market for one-room flats or one bedroom-hall-kitchen apartments, a demand that remains to be met across urban India.
With low educational qualifications—nearly a quarter of the chief wage earners have studied just up to primary school—this segment is overwhelmingly self-employed. Again, as mentioned last week, to a large extent this is a reflection of the low employability of the chief wage earners in this segment rather than of inherent entrepreneurship talents. There is, however, another aspect that is important for these small businessmen. Often, rigid work rules clash with their social obligations—for example, leave to attend marriages, funerals, etc. is not easily available. Freedom, therefore, is sometimes valued more than a regular salary.
The manufacturing sector takes up the largest share of employment with 37% , followed by wholesale and retail trade (24%), hotels and restaurants (13%) and transport (12%).
While the concentration of households in this segment is highest in the big cities of Mumbai, Thane, Delhi, Bangalore and Pune, smaller towns—not necessarily state capitals—feature in the top 50 list, including Coimbatore, Kanchipuram, Guntur, Durg, Jabalpur, Madurai, Raipur, Kanpur, Thrissur, Kota, etc. These are in a large part manufacturing centres or agricultural mandis, drawing migrants from the hinterland and offering significant scope for those who have little educational qualifications but are prepared to strike out on their own.
Indicus Analytics Research graphic by Shyamal Banerjee / Mint
E2 Segment graphic by Ahmed Raza Khan / Mint
—Indicus Indian Consumer Spectrum Series-XVII
This series is brought to you by research firm Indicus Analytics Pvt. Ltd.
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First Published: Mon, Apr 12 2010. 12 14 AM IST