NEARLY two million people have been without work for at least six months, new research exposing the lasting damage of the Covid-19 crisis has found.

The Resolution Foundation said the devastating impact of the pandemic on Britain’s labour force must be addressed by Chancellor Rishi Sunak in his upcoming Budget.

The think tank’s report says that almost two million people were either unemployed or fully furloughed in January, and had been for at least six months.

The number of workers on the Job Retention Scheme (JRS) has risen to around 4.5 million during the current lockdown, it says.

The figure is down from the nine million peak during the first lockdown, which the foundation said shows that firms have adapted to operating through the pandemic.

But it warned that the cumulative impact of the crisis poses the greatest threat to workers, as those on long-term furlough suffer from lost skills and earnings.

Eight per cent of workers currently employed either expect to lose their job in the next three months or have been told that they would be made redundant, the think tank found.

The figure rises to 21 per cent among those who have been furloughed for at least six months.

Resolution Foundation senior economist Nye Cominetti said: “The Chancellor must use his Budget to set out his own roadmap for phasing out the furlough scheme gradually and in a way that acknowledges where the risks of rising unemployment are highest — in sectors like hospitality. 

“This would keep a lid on rising unemployment and encourage firms to bring back existing workers, while tax breaks on hiring could help more people to move jobs too.” 

The report calls for the full JRS to remain in place for several months after public health restrictions have been lifted to give firms time to bring staff back.

It should remain in place for longer in sectors subject to legal restrictions such as hospitality and leisure, it says.

Trades Union Congress (TUC) general secretary Frances O’Grady said: “The best way to recover from this crisis is to build our way out of recession — not freezing the pay of millions of key workers and slashing public service spending.

“The TUC has shown that if the Chancellor invests now in key infrastructure, we could create more than a million jobs in the next two years.

“These would be the green jobs of the future — good new jobs upgrading our homes and delivering faster broadband, better transport and green tech.

“And the government could create jobs fast by unlocking the 600,000 vacancies and staff shortfalls in our public services, stretched like never before by the demands of the pandemic.”

Labour’s shadow chancellor Anneliese Dodds likewise urged Mr Sunak to protect jobs and secure the economy.

“Labour has called for a smart extension to the furlough scheme that includes training to help the long-term furloughed build new skills while they are unable to work,” she said.

“We’ve called for an overhaul of the government’s failing Kickstart youth jobs scheme to help our young people back into employment, and we’re urging the Chancellor to bring forward £30 billion in capital investment over the next 18 months to support the creation of 400,000 new jobs of the future.”