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The Resolution Foundation said the big falls in income that come with employment are holding people back from taking a new job that might not work out, or staying in a job they do not want in the hope a better one may come along. It said a new insurance scheme for unemployment could provide a safety net to give workers confidence to seek better work.

The think tank found that lower rates of job-to-job moves, which fell 15 per cent between 2002 and the start of the pandemic, meant that many people have seen missed pay and career opportunities.

It said this was why one in three graduates were working in non-graduate roles, contributing to weaker productivity growth.

The authors said a single person without children losing their job faced the fourth biggest income loss of any advanced economy in the Organisation for Economic Co-operation and Development.

They urged the Government to bring in a new unemployment insurance scheme where workers who lose their jobs receive support linked to their previous salary. The think tank suggested 65 per cent.

Louise Murphy, of the foundation, said: “Too many workers across Britain are having their careers held back by a fear of moving jobs and the new job not working out. And too many of those out of work have to take the first job they’re offered, rather than holding out for one that matches their skills.

“Workers just can’t afford the major loss of family income that unemployment can bring. But staying put in the wrong job, and not having the time and confidence to find a better one, isn’t just bad for individuals. It makes our economy less productive and Britain poorer as a result.”