New Delhi: India’s young workers are scrupulously salting away a part of their earnings, and are fretful about their job security, despite having access to more economic opportunities than their parents or grandparents ever did, according to a report by research firm IIMS Dataworks.
(Outlook of India’s younger generation) The findings disprove the stereotype of young Indians living only for the present and uncaring about the future, and have implications for both financial firms trying to tap youthful consumers and political parties heading into next year’s general election.
One in four workers aged 18 to 30 is a regular saver, according to the report, based on IIMS Dataworks’ 2007 Invest India Incomes and Savings Survey on the financial behaviour of 321 million paid workers across urban and rural India.
Future concerns: A file photo of software developers at IBM in Bangalore. The IIMS Dataworks survey found that young Indian workers are concerned about their job and housing security. (Photo: Namas Bhojani/Bloomberg)
“In some states, the savings culture among the young is very high, with six in 10 making regular savings, while Kerala, where more than eight in ten young people do so, tops the charts,” the report said, adding that a significant part of the savings goes into medium- and long-term financial products.
But, only a third of these young people are completely independent in their financial decision-making, IIMS Dataworks said, with the remainder influenced either by their spouses or parents and other family members.
That has “significant implications” for financial companies devising sales and promotion strategies targeting the young, it said. India has one of the world’s youngest populations with half of its 1.1 billion population being less than 25 years of age, according to published reports.
“I suspect that most of us who live in the cities think of the young as those who frequent pubs or brand-name stores,” said S.L. Rao, chairman of the Institute for Social and Economic Change based in Bangalore.
“Those are the white-collar workers in sectors like BPO (business process outsourcing) or biotech who have access to credit cards and bank loans.”
“But there are also the young who are poor and uneducated, self-employed or working in menial or blue-collar jobs. These people have no choice but to put money aside. What might have happened is that unlike their parents, who saved for their daughter’s wedding, they are saving for their own future,” added Rao.
Nearly one half of the young are “very concerned about their future job and housing security and for an additional quarter of them, these are front of mind issues” although they have grown up in more buoyant economic conditions than previous generations, said IIMS Dataworks.
The findings dovetail with a downturn in the world economy, continuing fallout from the US credit crisis, and 13-year-high inflation and rising borrowing costs at home that are causing mounting bank-loan defaults.
“For politicians heading into a general election ...these anxieties in the minds of the young are likely to manifest in voting patterns,” the report said, adding that how major political parties address these issues in the run-up to the next election could prove to be one of the factors influencing the poll outcome.
Rao at the Institute for Social and Economic Change said the sense of insecurity was no surprise because rising incomes are being outpaced by living costs, from house rents and transport to school fees, diluting the dividend from rapid economic growth.
“I’m not at all surprised that they are frightened about the future, about who will take care of them when they reach non-working age,” he said.
“Is this going to affect voting? As far as the population is concerned, they know the only weapon they have is to throw people out of power and try someone else,” Rao added. “People recognize that it is good governance that will reduce their fear of future. Unfortunately they are mostly disappointed.”