Unemployment and the fear of it are keeping mainlanders from spending and have pushed bank savings to record levels. In the first eight months, individual bank savings rose to 5.09 trillion yuan (about HK$4.73 trillion), an increase of 16.8 per cent over the same period last year, while consumer retail sales rose only 7.3 per cent in the period to 1.85 trillion yuan, and the retail price index fell 2.4 per cent. Manufacturers and shops are offering price cuts, giveaways, improved after-sales services and a cornucopia of choice. In an analysis of this weak demand, the Economic Daily yesterday said the main reasons were the changing job market and the astonishing discrepancy in incomes. Tens of thousands of people have lost their jobs in state companies, cutting their spending power, while the colleagues they leave behind do not know how long they will be employed, making them reluctant to spend. The same is happening in the government, which is shedding thousands of jobs. Urban workers laid off from state companies are supposed to receive a basic living allowance of 100 to 200 yuan a month for up to two years, according to where they live. In many cities, they receive nothing and are forced to rely on their savings or the charity of their family and friends. A second factor is rising costs - such as in rent, medical expenses, pensions and education - which are expected to go on increasing in the future, deterring people from spending. The Asian crisis is a further reason for uncertainty and caution. Weak consumer spending is also due to income disparity. An official survey of individual bank deposits at the end of 1996 found 2.5 per cent of depositors accounted for 83.2 per cent of the money, with 20 per cent of the money belonging to companies but diverted temporarily into private accounts, where it earns higher interest than in company accounts. The super-rich spend proportionately less than the ordinary depositor. Manufacturers of consumer goods have been searching for a new product which could set off a retail boom but have failed.