An annual skills report painted a "stark" picture in 2012, with a 20% downturn in public sector housing contracts, a 5% fall in the private housing sector and a 15% cut in road and other infrastructure construction.
Around 60,000 construction jobs were lost last year, and the industry is facing another decade of "pain", a new study has warned.
The Construction Skills Network predicted falls in job levels every year until 2016, reaching a low of 2.3 million, the worst for over a decade.
Recruitment is set to run at under 30,000 a year from now until 2017, mainly to fill vacancies arising from workers leaving, said the report.
Only Greater London and the East of England will see employment levels grow, according to the research.
Spokeswoman Judy Lowe said that construction had found itself at the centre of a "perfect storm" last year, hit by public spending cuts and a lack of investment in the private sector.
"Worryingly, the outlook doesn't look much better. By 2017 construction output will still be 12% down on its 2007 peak, and employment 17% down on its peak in 2008. We don't anticipate the industry returning to its former levels until at least 2022, meaning this will be one of the most difficult periods for construction on record."
There are around 150,000 unemployed construction workers, potentially costing the economy £2.1 billion a year in benefits and lost tax revenue, the report added.
Steve Murphy, general secretary of construction union Ucatt, said: "These latest figures make grim but all too predictable reading. The construction industry is struggling as a direct result of Government policies. The Government, the largest client in the construction industry, has cut spending at a time when the private sector has been unable to fill that gap. This has been catastrophic for construction workers who have needlessly lost their jobs.
"Rather than destroying people's lives the Government needs to invest in the future, starting with a social house building programme which will provide desperately needed homes, get skilled workers back to work and help get the industry back on its feet."