Social Stratification & Inequality: Systems, Mobility & Business Impact

TAKEAWAYS:

• Social stratification divides societies into layers (caste, class, status) that shape access to resources, power, and opportunities.
• Mobility (vertical/horizontal) determines whether individuals can move between strata—critical for business hiring, marketing, and policy.
• Inequality (income, wealth, education) persists due to systemic barriers (discrimination, lack of access) and is reinforced by institutions like education and media.
• Business applications: Stratification affects consumer behavior, workforce diversity, and corporate social responsibility (CSR) strategies.
• Nepal’s context: Caste and ethnicity intersect with class to create unique barriers (e.g., Dalits in urban jobs, Newar entrepreneurship).
• Global examples: Companies like Google (pay gaps), Daraz (urban/rural digital divides), and Nabil Bank (loan access disparities) must navigate stratification to succeed.

1. What Is Social Stratification?

Social stratification is the division of society into hierarchical layers (strata) based on access to resources like wealth, power, prestige, and social status. Unlike social differentiation (which groups people by roles like age or gender), stratification involves unequal distribution of rewards and is often ascribed (born into) or achieved (earned through effort).

Key Features of Stratification

mindmap
  root((Social Stratification))
    Feature1 "Hierarchical Layers"
    Feature2 "Persistent Over Time"
    Feature3 "Unequal Access to Resources"
    Feature4 "Cultural Universality"
    Feature5 "Structural Constraints"
    Feature6 "Intergenerational Transmission"

Why It Matters for Business?

• Market segmentation: Companies target different strata (e.g., Daraz offers premium delivery for urban middle-class vs. cash-on-delivery for rural poor).
• Workforce diversity: Stratification affects hiring (e.g., Ncell may struggle to recruit from marginalized groups due to education gaps).
• Consumer behavior: Lower strata prioritize essentials (e.g., Nepalgunj’s slum dwellers buy cheaper Khalti plans vs. Kathmandu’s elite using eSewa for luxury services).

2. Types of Stratification Systems

Stratification systems vary by culture and history. The three main types:

Worked Example: Nepal’s Caste System in Business

• Problem: Dalits (e.g., Kami or Damai communities) face exclusion in formal jobs due to historical discrimination.
• Solution: F1Worldwide (a Nepali NGO) partners with Nepal Telecom (NTC) to train Dalit youth in IT—breaking mobility barriers.
• Outcome: 30% of NTC’s rural call-center staff are now from marginalized groups, improving service reach.

3. Dimensions of Stratification

Stratification operates across four key dimensions:

1. Economic Inequality

   • Wealth vs. Income: Wealth (assets) is more unequal than income (earnings).
   • Gini Coefficient: Nepal’s Gini index (~0.4) shows high inequality (0 = perfect equality, 1 = max inequality).
   • Business Link: Daraz’s urban customers spend 5x more than rural ones due to income gaps.

2. Social Status (Prestige)

   • Occupations like doctor or engineer carry more prestige than sanitation worker or farmer.
   • Example: Chaudhary Group’s ads associate their products with "success" (e.g., "For the modern Nepali family").

3. Power

   • Access to political or organizational authority (e.g., Nepal’s elite families controlling media like Kantipur).
   • Business Risk: Companies like Nepal Oil face protests if seen favoring powerful groups in contracts.

4. Race/Ethnicity

   • In Nepal, Madhesi or Janajati groups often face discrimination in urban jobs.
   • Case Study: Himalayan Java’s tea plantations historically employed Dalit and Adivasi workers at lower wages—until labor laws changed.

4. Social Mobility: Can People Move Between Strata?

Social mobility measures how easily individuals can change their stratum. Two types:

A. Vertical Mobility

• Upward: Moving to a higher stratum (e.g., a farmer’s child becoming a doctor).
• Downward: Losing status (e.g., a banker losing wealth in a crisis).
• Example: Nepal’s "Pahadi" elite sending children abroad for education to escape caste/class limits.

B. Horizontal Mobility

• Moving within the same stratum (e.g., a teacher switching schools).
• Example: Ncell employees transferring between departments without pay changes.

Barriers to Mobility in Nepal

flowchart TD
    A["Lack of Education"] --> B["Limited Job Opportunities"]
    C["Caste Discrimination"] --> B
    D["Urban-Rural Divide"] --> B
    B --> E["Poverty Trap"]
    E --> F["Intergenerational Inequality"]

Business Strategy for Mobility

• Scholarships: Nabil Bank funds Dalit students to study finance—future employees.
• Affirmative Action: NTC reserves 5% jobs for Dalits and women.
• Microfinance: Khalti’s small loans help rural women start businesses (e.g., sari-sari stores).

5. Inequality in Nepal: Caste, Class, and Gender

Nepal’s stratification is a mix of caste, class, and ethnicity, worsened by:

• Historical exclusion: Dalits were denied temple entry or education.
• Urban-rural divide: Kathmandu’s elite vs. Terai’s landless laborers.
• Gender gap: Women earn 30% less than men (World Bank, 2022).

Case Study: NEPSE and Stratification

• Problem: Only 10% of NEPSE-listed companies have women on boards.
• Impact: Investors see this as a risk (lack of diverse perspectives).
• Solution: Nepal Investment Bank now requires 30% female representation in loan applications.

6. Global vs. Nepali Stratification

Real-World Link: WhatsApp in Nepal

• Problem: Rural users (lower strata) struggle with data costs (WhatsApp requires internet).
• Solution: Ncell’s "Happy Hours" (cheaper data) targets rural youth—reducing digital inequality.

7. Business and Stratification: Ethical and Strategic Challenges

Companies must navigate stratification to avoid backlash and maximize market reach.

A. Ethical Challenges

• Exploitation: Daraz’s rural delivery partners earn Rs. 200/day vs. Rs. 5,000 for urban staff.
• Discrimination: Banks historically denied loans to Dalits or women without male guarantors.

B. Strategic Opportunities

Case Study: Toyota Kirloskar (India/Nepal)

• Challenge: Low-income buyers couldn’t afford cars.
• Solution: Toyota’s "Dream Run" program offers low-interest loans to drivers (often from lower strata).
• Result: Increased sales in Bharatpur and Biratnagar.

1. "Identify target stratum" →
   • If low income → "Offer micro-loans (Nabil Bank)"
   • If urban elite → "Premium services (eSewa)"
   • If rural → "Cash-on-delivery (Daraz)"**

## In the Real World

1. eSewa and Digital Divide

   • Idea Used: Economic stratification (urban vs. rural access).
   • How? eSewa’s app requires smartphones—excluding 60% of Nepalis who rely on feature phones. Solution: eSewa now offers USSD codes for basic transactions.

2. Khalti’s Microtransactions

   • Idea Used: Class-based pricing.
   • How? Khalti charges Rs. 10 for small transfers (used by rural shopkeepers) vs. Rs. 50 for large payments (urban professionals).

3. Nepal Telecom (NTC) and Affirmative Action

   • Idea Used: Caste-based mobility barriers.
   • How? NTC reserves 5% jobs for Dalits and trains them in call centers—improving service quality while fulfilling social obligations.

4. Daraz’s Urban vs. Rural Logistics

   • Idea Used: Geographic stratification.
   • How? Urban orders get same-day delivery, while rural orders take 3–5 days (and cost more). Criticism: Reinforces class divide.

5. Nabil Bank’s Loan Approvals

   • Idea Used: Wealth and power disparities.
   • How? Loan officers unconsciously favor applicants from elite families (e.g., Newars, Brahmins) due to perceived lower risk. Data: Only 15% of loans go to Dalit or Madhesi applicants.

## Exam Tip

How This Unit Is Tested (TU/PU/NEB Style)

1. Definitions + Examples (3–5 marks)

   • Question: "Define social stratification and give two Nepali examples."
   • Answer: Start with the pyramid diagram, then cite:
     • Caste: Brahmin vs. Dalit in Himalayan Java tea estates.
     • Class: Nepalgunj’s slum vs. Kathmandu’s elite in eSewa usage.

2. Compare Systems (5–7 marks)

   • Question: "Differentiate caste and class systems with Nepali business cases."
   • Use the table above but add:
     • Caste: Nepal Oil historically hired Brahmin managers over Dalit engineers.
     • Class: Daraz’s urban premium vs. rural basic services.

3. Case Study Analysis (7–10 marks)

   • Question: "How does NTC’s affirmative action policy address stratification?"
   • Structure:
     1. Identify the stratum (Dalits in IT jobs).
     2. Barrier (historical exclusion, lack of education).
     3. Solution (training programs, reserved quotas).
     4. Business benefit (wider talent pool, better CSR image).
     5. Limitation (some Dalits still lack basic literacy).

4. Critical Thinking (5–8 marks)

   • Question: "Can social mobility in Nepal be achieved without changing the caste system?"
   • Answer:
     • No, because:
       • Education reforms (e.g., Nepal’s free schools) help but caste discrimination persists in hiring.
       • Example: A Dalit doctor may still face glass ceilings in hospitals run by Brahmin administrators.
     • Partial solutions:
       • Quotas (like NTC’s 5% rule).
       • Microfinance (Khalti loans for entrepreneurs).

5. Diagram-Based Questions (4–6 marks)

   • Question: "Draw and explain a social mobility graph for Nepal."
   • Must include:
     • Vertical arrows (upward mobility rare for Dalits).
     • Horizontal arrows (Newars moving within business class).
     • Labels: "Caste barrier," "Education access," "Urban jobs."

Pro Tip:

• Always use Nepali examples (TU/PU love this).
• Link to business—even if the question is theoretical, show how Ncell, Daraz, or Nabil Bank would be affected.
• For case studies, pick one company (e.g., Himalayan Java) and analyze one stratum (e.g., Dalit workers) in depth.