Some of it may be the other side of the building society windfall coin. The weekend that the Halifax bonuses were paid out, I happened to visit my local DIY warehouse for a pair of secateurs. Economists, unlike other social scientists, do not often get the opportunity to do real fieldwork, observing people behaving as economic agents, but that day I felt I was watching an economic phenomenon.
The place was teeming with families buying expensive non-essentials. On a typical Saturday I see people buying wallpaper, paint and a few geraniums. But not that week. It was the gazebos, the wooden designer garden furniture and the pounds 50 shrubs that were being loaded up onto virtually every trolley. Many families needed more than one trolley. Thousands of pounds was passing before my eyes in a way normally only seen in the clothes shops patronised by ladies who lunch.
Economics textbooks tell us that people save windfall gains. My eyes were telling me that they do not. The retail sales figures are telling us that they do not. The latest inflation figures are also telling us that they do not, and so are the record VAT receipts. We should not therefore be surprised that labour market statistics are telling us the same thing. Real money is being shifted into consumption.
The mechanism happens to be an unusual and one-off one, but the outcome is the same. Those with money are spending it, and those they spend it with need to employ people to help them to do so.
The question I started with probably ought to be turned on its head. We ought not to be asking why unemployment is falling so quickly. Rather, we should be wondering why it remains as high as it is, particularly when we take account of high levels of inactivity (in other words complete withdrawal from the labour force) as well.
One encouraging phenomenon is the rapid fall in unemployment which is taking place among young people. But this produces something of a policy dilemma. The central plank of the Government's unemployment policy is to target its Welfare to Work policy on the under-25s. But they are doing so at a time when the evidence firmly points to the view that the under- 25s are not the problem. There are only 200,000 of them left who have been unemployed for over six months. (The Government's election manifesto promised to reduce their number by 250,000.)
The real problem lies with the over-40s. These are the people who have seen industries collapse under them, their specialist skills, often high level and advanced, no longer needed. They are the ones whose homes have been repossessed. They are the people who have lost hope, and whose wives have lost hope.
For there is a gender dimension to this, often unspoken. Women in their forties do not have the same trouble getting jobs as men of the same age. They might be rejected by those looking for bright young things, in PR, selling CDs or as senior managers, but they are welcomed by supermarkets, schools, hospitals and other key expanding sectors where the ability to deal with people, stability, maturity and knowing something about Life are important characteristics looked for in employees.
The main exceptions to this rule are the wives of unemployed men. We have a benefit system which treats them as dependents, and which knocks their earnings pound for pound off the family benefit entitlement. These middle aged couples are the forgotten unemployed. Their employed counterparts are displaying their suntans from their recent holidays, accumulating pension rights, watching their children stay on in full-time education in unprecedented numbers, and spending their building society windfalls on new fitted kitchens and garden furniture.
Fifty-year old men who have been unemployed for a year do not make trouble. They do not indulge in anti-social behaviour. They do not make their problems obvious in the way that other groups do. Yet they ought to be the backbone of our social structure. They should be the people who act as role models for younger colleagues and neighbours. They should be helping their own children as they enter adult life and begin to raise families of their own.
This is the group that have drawn in on themselves. They manage their money carefully and survive, quietly and privately at home, grimly continuing to apply for jobs they feel they have little hope of getting. They are a little bewildered by the way the world has changed. They have fallen off the top of the industrial tree and yet have no place in the world of fast food and home helps that their wives and children inhabit.
Young unemployed people do need help, but it tends to be of two kinds: in educational and social development opportunities to remedy the effects of a school system that has allowed some people to emerge with inadequate basic education and few social skills; and in real careers advice about the nature of work in the modern economy, and what is necessary to get it and keep it.
Young men have lost the desire to be engine drivers, but too many of them still aspire to be motor mechanics at a time when cars have become much more reliable, and where the things that go wrong are usually sophisticated electronics components rather than basic mechanical ones. Perhaps they simply need to fall in love with computers.
Young women need to feel, as their mothers do, that although motherhood is good for self-esteem, work can be too; and although motherhood on your own does have its rewards, it is also very hard work. But this ought to be done within the mainstream. It does not require employment subsidies. The labour market is clearly showing that employable young people are getting jobs.
What we need in the 1990s is the Phyllosan approach to unemployment. We must fortify the over-forties. A forty-year-old man is only half way through his life. It makes no sense at all to accept that he is never going to work again. If we are going to have job subsidies, this is the group that needs them, and they may need them for some time, not just on a temporary basis.
They have social skills and they have authority. The market may not be willing to employ them at the sort of wages they need to sustain a family, but there remains a need for jobs where they would be welcome. The sort of job where a mature man keeping a friendly eye on things would keep the social wheels better oiled than they are now. Having attendants in car parks rather than just machines; conductors on buses; guards on trains; staff on stations; keepers in parks: that would be real work for them and an improvement in the welfare of all of us.
Pamela Meadows is director of the Policy Studies Institute.Reuse content