Almost three-quarters of a million jobs have been lost from company payrolls since the start of the coronavirus pandemic in March, with the youngest and oldest workers bearing the brunt of the employment crisis.

Paid employment dropped for the fourth successive month in July, though the number of employees losing their jobs began to slow, according to official figures.

The number of workers on company payrolls fell by 730,000 between March and July as another 81,000 jobs were lost since June, in large part due to cutbacks by employers hit hard by the Covid-19 pandemic.

There were also drops in pay with levels including bonuses down 1.2% and regular pay down 0.2%, the first negative reading since records began in 2001.

Young people were the worst affected by the loss of employment and most likely to be hit by a loss of hours after the Office for National Statistics said it had recorded a rise in zero-hours contracts to the highest level on record.

The number of people on zero-hours contracts increased by 156,000, or 17.4%, to 1.05 million.

Young people aged 18 to 24 were among the worst affected by job cuts along with workers over the age of 65, who suffered the largest fall in employment since records began. The number of those aged 65 years and over and in work decreased by 161,000 to 1.26 million over the three months to June.

It would appear that many people from both groups retreated from the jobs market to become economically inactive, leaving the official unemployment rate little changed.

“The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs,” said Jonathan Athow, the ONS’s deputy national statistician for economic statistics.

“Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed.”

However, this did not mean that the people in question did not want a job, he added.

“Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work,” he said.

“In addition, there are still a large number of people who say they are working no hours and getting zero pay.”

Many workers made redundant have claimed benefits, pushing the claimant count up by 94,400 (3.6%) to 2.7 million in July. The ONS said that since March, the claimant count had increased by 116.8%, or 1.4 million.

Ruth Gregory, a senior UK economist at the consultancy Capital Economics, said the cracks evident in the latest batch of labour market data were “likely to soon turn into a chasm” with the unemployment rate rising from the current level of 3.9% to about 7% by mid-2021.

“Further rises in unemployment in the coming months are all but inevitable as the furlough scheme unwinds. This is just the lull before the storm,” she said.

A report earlier this week found that as many as a third of UK employers expected to cut jobs by October.

The poll by the Chartered Institute of Personnel and Development and Adecco Group, a staffing company, suggested the UK was likely to experience a wave of job losses across the economy as the government started to withdraw the coronavirus job retention scheme.

The furlough scheme still accounted for around 7.5 million workers in July, down from a high of 9.2 million.