Cast your mind back to March 2008. The financial markets have been in turmoil since the previous summer and in the previous month the Labour government has been forced to nationalise the troubled bank Northern Rock. Few realised it at the time but the economy had peaked. A deep and brutal recession was about to begin. In that month, the average basic weekly wage, excluding bonuses, was £473.

The recession officially came to an end by late 2009 and after a couple of years of weak and patchy growth, the worst seemed to be over. Activity picked up, unemployment started to come down. Yet more than nine years after the slump of 2008 began, wages – the yardstick by which most people judge whether the economy is doing well or not – have not recovered. In fact, according to the Office for National Statistics, they have gone backwards. The average basic weekly wage, adjusted for movements in prices, now stands at £458.

This is a quite staggering performance, which breaks all sorts of records for all the wrong reasons. There has been nothing like the current squeeze on real wages in living memory. The Resolution Foundation, a thinktank that concentrates on the living standards of those on middle and low incomes, says the 2010s are on course to be the worst decade for wage growth since the one that included the Battle of Trafalgar in 1805.

There is certainly no immediate prospect of workers becoming better off. In the past 12 months, wages have grown more slowly than prices. Basic pay in the three months to April 2017 was 0.6% lower than in the same three months of 2016.

The increase in prices is pretty easy to explain. Inflation was artificially low as a result of a temporary collapse in oil prices. The cost of crude has subsequently recovered a bit, but the depreciation of the pound since the Brexit referendum has also had the effect of pushing up the cost of living.

The continued depressed state of wages takes a bit more explaining. For years, the Bank of England has been predicting that the fall in unemployment will make it harder for employers to attract and retain workers, forcing them to offer more generous pay deals. But that has simply not happened. In the past year, employment has risen, unemployment has fallen and inflation has started to bite: in past times a combination of factors that would lead to pressure for higher wages. But a year ago regular pay was rising by 2.4%; now it is rising by 1.7%.

As John Philpott, who runs the Jobs Economist consultancy, noted: “What’s remarkable is that pay growth, however measured, is so weak at a time when employment is at joint record rate of 74.8% and unemployment at a 42-year low of 4.6%, driven almost entirely in the latest quarter by relatively strong growth in full-time jobs for employees on permanent contracts. Hard times and near full employment make strange bedfellows, highlighting the extent to which a deregulated labour market with an abundance of workers available to fill low wage vacancies has altered the UK jobs landscape.”

Pay curbs in the public sector are a factor but they are not the whole story. Just as in the early 19th century, private sector employers feel no need to pay higher wages. Despite the fall in the jobless total, they can tap into a large pool of unskilled, deunionised, insecure workers. History is repeating itself.

