TRADE unions and the Labour Party are backing calls for the “biggest job creation drive” ever in peacetime to stave off the worst collapse of the economy and employment levels since the 1930s.

As the government abandons its Job Retention Scheme, which subsidises the wages of workers laid off during the coronavirus crisis, unemployment is forecast to hit 4.5 million by the end of the year ⁠— worse than the three million created during the Thatcher regime of the 1980s.

A devastating new report condemns Tory government inaction over the last decade for contributing to the approaching crisis, and calls for “the biggest job creation drive” since the end of the second world war.

The report from independent analysis group the Resolution Foundation won backing from trade unions and Labour at the weekend.

It warns that the poorest, youngest and lowest-paid will be worst-hit and particularly workers in industries such as hospitality, non-food retail and arts, leisure and entertainment which have been particularly damaged over the last few months.

Resolution Foundation senior economist Nye Cominetti said: “Britain is slowly emerging from the lockdown that brought the economy to a halt and sent employment tumbling, but we are a long way off returning to business as usual, and its jobs crisis is far from over.

“A second wave of unemployment later this year, following the phasing out of the job retention scheme, could leave Britain with the highest unemployment levels in a generation.

“The government’s approach should include a job protection scheme to maintain employment in the hardest-hit sectors and the biggest ever peacetime job creation programme.”

Labour condemned failed Tory initiatives such as pledging to build 200,000 new homes as “never getting further than a press release” and said the government’s priority must be protection and creation of jobs.

Labour leader Keir Starmer said: “We are on the cusp of one of the biggest economic crises we have ever seen.

“The government must immediately prioritise protecting people’s lives and livelihoods.”

He called for a “back to work” budget focused on “jobs, jobs, jobs.”

He attacked the Tories’ record of plummeting investment in UK industry ⁠— including in house building ⁠— and said: “For much of the country, the Tories’ record on building and investment has been a lost decade.

“Much-hyped plans such as the Starter Homes initiative ⁠— which built zero houses despite having £2.3 billion allocated to it ⁠— barely even made it beyond the press release. It’s been talk, talk, talk rather than build, build, build.”

Unite union assistant general secretary Steve Turner said: “With a tsunami of job losses expected across the economy as the Chancellor runs down the government’s Job Retention Scheme, today’s call by the Resolution Foundation for a ‘Job Protection Scheme’ to replace it is timely and echoes calls from the Trade Union Congress, and supported by Unite, for a ‘Job Guarantee Scheme’ as a central element of a recover and rebuild strategy post-Covid.”