Predominantly self-employed

Predominantly self-employed

This week we take up the E5 segment—households where the chief wage earner is school-educated and in the middle years, and married with young children. When it comes to family structure, there is a distinction in this segment—it includes businessmen living in joint or nuclear families and skilled workers in nuclear families.

Households where the chief wage earners are skilled workers but stay in a joint family show separate characteristics from those who stay in nuclear families; these households form a unique segment F3, which will be taken up later. Put in another way, given the same educational qualifications and life stage, skilled workers who stay in nuclear families share the same characteristics as businessmen—a pointer to the common aspirational level and independent mindset of the chief wage earners in these groups.

Also See Indicus Analytics Research (Graphic)

E5 is the third largest urban consumer segment in terms of household strength and fourth largest in terms of population, comprising 8.7% of the urban population—there are 2.85 million people in the 694,000 households in this segment.

Given their low educational achievements—41% of the chief wage earners have the highest qualification of finishing school—incomes are low. Median household income is Rs1.03 lakh and 85% of the households earn less than Rs3 lakh a year.

Also Read Previous articles in the Indicus Indian Consumer Spectrum Series

Household size is generally higher in this segment—72% having three or four members—compared with the E segments taken up so far. There is variation here, too, and in the smaller towns, household sizes are larger, exceeding five in Alwar, Aligarh, Gwalior, Purbi Singhbhum, Bhagalpur, Indore, Bikaner and Kanpur Nagar.

The higher household size is thanks to the young children—most households have one or two minors; only 25% have more than two children. This is an urban trend, to have smaller families, even in relatively lower income groups. Clearly, parents are aiming to give their children a better life than they have had and this includes not just clothing and feeding them better with the latest market offerings, but also raising their education standards, sending them to English-medium private schools, providing for tuition classes, etc. Households spend on an average 3.9% of their budget on educational expenses.

Also See E5 Segment (Graphic)

Chief wage earners in this segment are predominantly self-employed, yet 42% have salaried jobs. Again here, the presence of children makes for a greater need for regular income; there would be some in this group who may have tried their hand at being a small entrepreneur but have failed in their younger years. Now older in age, with more family commitments, stability is more important; this is, after all, the middle years segment—43% of the chief wage earners are in the 35-44 year age group, the highest share among all the E segments.

The dominant sector of employment is wholesale and retail trade, comprising a 26% share, a sector that offers ample opportunity for those with low skills or business aspirations. Manufacturing is a close second at 24%, transport and communication take up 14%, while construction and real estate-related activities, 11%.

Businesses would be essentially small enterprises, while those in salaried jobs would be working mainly in private proprietorship companies. Around 11% do have jobs with the government or public sector companies, while 7% have jobs with private limited companies. Among the latter, given the low educational qualifications, the jobs would be at the lowest rungs in different departments.

Delhi, Mumbai, Bangalore, Thane, Pune, Chennai, Ahmedabad, North 24 Parganas, Kolkata, Coimbatore are the urban districts with more than 100,000 households in the E5 segment.

Indicus Analytics Research graphic by Shyamal Banerjee / Mint

E5 Segment graphic by Ahmed Raza Khan / Mint

—Indicus Indian Consumer Spectrum Series-XX

This series is brought to you by research firm Indicus Analytics Pvt. Ltd.