Cast your mind back 10 years. It is early 2006 and everything seems to be going well. Unemployment is around 5%, the Bank of England prides itself on keeping inflation at or close to its 2% target, earnings are going up by 4% a year.

As we now know, this was the equivalent of the Edwardian summer – the calm before the storm. Since the financial and economic crisis of 2007-09, things have never been the same again.

That much is obvious from the labour market data released by the Office for National Statistics. Employment growth remains impressively strong and the jobless rate of 5.1% is the lowest since October 2005, a combination of factors that would normally see earnings shooting upwards.

In fact, the opposite is happening. The rate of growth in average earnings is falling not rising and at 2% is running at half the level of the pre-crash era.

UK unemployment falls but wage growth weakens Read more

In part, this is due to the pickup in employment being concentrated in low-pay jobs. There are, though, three other factors at work.

The first is that there is slack in the labour market despite the fall in unemployment. At some stage, employers will find it so hard to recruit and retain staff that workers will gain bargaining power and earnings will start to grow more rapidly.

We are not there yet. John Philpott, an expert on the labour market, thinks the jobless rate might have to go below 4% for wage pressures to build.

The second factor is the low level of inflation, which affects the starting point for pay talks. Put simply, if inflation is 2% and the economy is doing well, employers settle for 4%. When inflation is zero, they budget for a 2% rise. This trend will be reinforced if – as looks likely – the fresh fall in oil prices means inflation remains lower for longer.

Finally, the deep downturn of the financial crash has left scar tissue. Since the crisis, employees have been prepared to sacrifice pay in order to hold on to their jobs, which is one reason employment is at record levels.

Add to the mix the fact that global markets are in freefall and the conclusion is plain: earnings are going nowhere fast.