Social Stratification & Inequality: Systems, Mobility & Business Impact

Core Concepts: Definitions and Frameworks

1. Social Stratification: The Hierarchical Ladder

Social stratification refers to the division of society into layers (strata) based on access to resources, power, prestige, and opportunities. Unlike social differentiation (which is fluid and temporary), stratification is stable, hierarchical, and persistent across generations.

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2. Types of Stratification Systems

Worked Example: Daraz’s Pricing Strategy Daraz uses class-based segmentation to adjust prices:

• Urban areas (high income): Premium delivery options (₹500+ for same-day).
• Rural areas (low income): Subsidized shipping (₹100 for 3–5 days).
• Justification: Reflects the purchasing power disparity between strata. Question: How does this align with Marx’s class theory? (Answer: Daraz exploits class differences to maximize profit, mirroring bourgeoisie-proletariat dynamics.)

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3. Dimensions of Stratification

Stratification is measured along three axes:

1. Wealth: Income, assets (e.g., Nabil Bank’s loan eligibility criteria favor urban professionals).
2. Power: Political or coercive control (e.g., political dynasties like the Deuba family in Nepal).
3. Prestige: Social respect (e.g., doctors vs. sanitation workers).

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4. Social Mobility: Moving Up (or Down) the Ladder

Social mobility is the ability to change one’s position in the stratification system. Types:

• Vertical Mobility: Upward (e.g., a Dalit child becoming a doctor) or downward (e.g., a businessman losing wealth).
• Horizontal Mobility: Changing roles without status change (e.g., a farmer becoming a teacher).
• Intergenerational Mobility: Changes across generations (e.g., parents poor, children middle-class).
• Structural Mobility: Entire groups moving due to societal changes (e.g., post-1990s liberalization in Nepal).

Case Study: Nabil Bank’s "Swasthya Sewa" Loan Scheme

• Target: Low-income groups (e.g., Dalits, rural women).
• Mechanism: Microloans for healthcare, with collateral-free options.
• Impact:
  • Upward mobility: 30% of borrowers reported improved social status post-loan (2022 data).
  • Criticism: High interest rates (12–15%) trap borrowers in debt cycles. Question: Does this promote mobility or reinforce inequality? (Answer: Mixed—enables some mobility but exploits structural vulnerabilities.)

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5. Theories Explaining Stratification

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In the Real World

1. eSewa and Digital Divide

   • Idea: Access to technology as a stratifier.
   • How: eSewa’s app requires smartphones and internet—excludes illiterate/rural populations.
   • Data: 65% of eSewa users are urban; rural users rely on agents (who charge commissions).
   • Business Lesson: Companies like eSewa must design inclusive digital interfaces (e.g., voice-based payments) to avoid deepening inequality.

2. Pathao’s Driver Pay Structure

   • Idea: Class-based exploitation in gig economy.
   • How: Pathao pays drivers ₹150–₹300/hour (after fuel costs), while corporate profits soar.
   • Stratification: Drivers (low prestige, high risk) vs. investors (high profit, low risk).
   • Real Example: During COVID-19, Pathao cut driver pay by 30% while keeping executive bonuses—amplifying class divide.

3. NEPSE and Stock Market Access

   • Idea: Wealth as a barrier to mobility.
   • How: Minimum ₹10,000 investment required to trade stocks—excludes 70% of Nepalis (daily income <₹500).
   • Alternative: Apps like Merostock offer fractional shares (₹100 investments), but still favor urban youth.
   • Business Impact: Banks like Nabil and Global IME promote stock trading as "wealth creation," ignoring structural barriers.

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6. Inequality in Nepal: Caste, Gender, and Ethnicity

Nepal’s stratification is multi-layered:

• Caste: Dalits (13% population) face employment discrimination (e.g., only 2% in formal jobs).
• Gender: Women earn 30% less than men (World Bank, 2022).
• Ethnicity: Janajatis (indigenous groups) have lower literacy rates (45% vs. 68% national average).

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7. Business Applications of Stratification

A. Market Segmentation

Companies use stratification to target specific groups:

• Luxury: Himalayan Java markets coffee as "elite" (₹800/cup).
• Mass: Bhatbhateni sells rice at ₹10/kg (targeting low-income households).
• Niche: Organic farms in Pokhara charge 3x more, assuming affluent buyers.

B. Workforce Management

• Hierarchical Organizations: Banks (e.g., Nabil) promote based on class background (e.g., "sons of officials" get faster promotions).
• Exploitation: Garment factories in Chitwan pay women ₹20/day while exporting to H&M (€20/shirt).

C. Policy and CSR

• NTC’s "Digital Nepal" Initiative: Aims to reduce rural-urban digital divide but fails to address affordability (₹500/month internet in cities vs. ₹100 in villages).
• CSR Failures: Chaudhary Group’s "education scholarships" often go to elite schools, reinforcing class barriers.

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8. Criticisms and Ethical Dilemmas

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Exam Tip

How This Unit is Tested (TU/PU/NEB Patterns):

1. Definitions + Examples (30% weight)

   • Do: Define "social mobility" + give one Nepalese example (e.g., a Dalit IAS officer).
   • Avoid: Generic examples (e.g., "America’s class system") without local context.

2. Compare Theories (25% weight)

   • Question: "How do Marx and Weber explain Nepal’s wealth inequality?"
   • Answer:
     • Marx: Chaudhary Group (bourgeoisie) exploits daily wage laborers (proletariat).
     • Weber: Prestige of "business family" names (e.g., Shresthas) opens doors.

3. Case Studies (20% weight)

   • Question: "Analyze how Pathao’s driver pay system reflects stratification."
   • Structure:
     1. Identify strata: Drivers (low power/prestige) vs. investors (high profit).
     2. Theory link: Conflict theory (exploitation).
     3. Real impact: Driver suicides in 2021 due to debt.

4. Business Applications (15% weight)

   • Question: "How can a bank like Nabil use stratification for marketing?"
   • Answer:
     • Tiered loans: Low-interest for urban professionals, high for rural.
     • Targeted ads: "Premium credit cards" for high-net-worth individuals.

5. Data Interpretation (10% weight)

   • Question: "Interpret this table on Nepal’s income distribution."

     Stratum	% Population	% Income
     Top 10%	10%	35%
     Bottom 50%	50%	15%

   • Answer:
     • Gini coefficient: ~0.4 (high inequality).
     • Business implication: 85% of income goes to 10%—luxury markets thrive, but mass markets are underserved.

Pro Tip: Always link theory to Nepal and use real companies (e.g., Daraz, Nabil, Pathao). Memorize one case study per theory (e.g., Marx = Chaudhary Group, Weber = Brahmin dominance in TU).

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Final Visual Summary