A new IPPR report found there were 2 million ‘missing’ jobs in the economy, meaning there were more than 2 million fewer people not working in the same way they were pre-pandemic.
HMRC data showed at the end of July, there were still 1.9 million furloughed employees.
On top of this, there are still about 200,000 fewer employees on firms’ payrolls than before the pandemic.
Part-time work, a key source of income for many with caring responsibilities, is 9% below pre pandemic levels and the number of economically inactive people of working age is still 412,000 higher than before the pandemic.
The IPPR warned if these people return to the labour market, there may not be enough jobs to support them.
Industries with average pay below the living wage face twice the risk of unemployment than workers in other industries, with the average net weekly pay for the bottom 20% of earners is £59 a week less than the UK living wage.
There is one vacancy for every three jobs still hit by the pandemic in below living wage sectors.
The report said low-paid workers were at a heightened risk of being hit by the end of government support schemes both in the short term with the end of furlough and the medium term due to low public investment.
One in five businesses using the furlough scheme are considering redundancies and one in four are considering reducing hours for employees, according to a British Chamber of Commerce survey.
Speaking to HR magazine, Carsten Jung, IPPR senior economist, said: “The end of the furlough scheme poses a risk particularly to those on low incomes – the government should keep and tweak the scheme to support them.
“It should extend it until after the economy is recovered, and tweak it to better encourage part-time work. With eight out of 10 people already off furlough and back at work, keeping and tweaking it would cost only a fraction of its previous cost.
Before the pandemic there was a trend towards growing job opportunities for the most skilled and weak growth for the rest which could continue post pandemic.
IPPR found 5.5 million workers are currently in insecure employment in the UK, such as zero-hours contracts, temporary work or insecure contracting through agencies.
A further 2.3 million workers are classed as being in underemployment, where workers are unable to work as many hours as they would like and take home less pay.
Jung added: "The best thing the government can do for wellbeing and skill progression is to stimulate the economy by investing more. This will increase employment and reduce insecurity, two huge factors in determining employee mental health as well employers' investment in their skills."
