More than a third of UK music industry workers lost their jobs last year – 69,000 in total – as venues closed, festivals were scrapped, tours ground to a halt and the pandemic wiped billions off the value of the sector.

UK Music, the umbrella organisation representing the commercial music industry from artists and record labels to the live music sector, said the value of the industry almost halved last year due to the financially crippling impact of the Covid crisis.

The music industry’s contribution to the wider UK economy, ranging from music sales and licensing to stadium tours, gigs in grassroots venues and merchandise, plummeted from a record £5.8bn in 2019 to £3.1bn last year.

With hundreds of festivals and live music events cancelled, and no insurance scheme in place to enable them to reschedule, there was a wave of job losses. As three-quarters of music industry workers were self-employed, many fell between the cracks of eligibility for government support schemes, resulting in tens of thousands of workers having to seek new occupations to survive the pandemic.

UK Music’s annual report, This is Music 2021, estimates that employment in the sector plunged by 35% from an all-time high of 197,000 in 2019 to 128,000 last year.

“The past 18 months have been exceptionally challenging for the UK music industry, with billions wiped off the value of the sector, but we are determined to look to the future and focus on recovery,” said Jamie Njoku-Goodwin, chief executive of UK Music.

The hardest-hit sector was the UK live music scene which saw revenues collapse by about 90% to just a few hundred million pounds, while the value of British music exported overseas, such as through international touring, slumped 23% to £2.3bn.

Horace Trubridge, general secretary of Musicians’ Union, said: “The total loss of live work for over a year and the fact that the financial help offered by the government left so many out in the cold, has resulted in a huge loss of jobs and talent.

“With the live industry now having to deal with the appalling impact of Brexit on artist’s mobility, now is the time for this government to step in and provide realistic and effective support for an industry that was once the envy of the world and is now struggling to survive.”

Tom Watson, chair of UK Music, and former shadow culture secretary, said “more needs to be done to remove the barriers to touring in the EU, boost UK musical exports and deliver more funding for music in education”, adding that it was “critical” that the music industry receive the support it needs from the government to fully recover “and protect a talent pipeline that is the envy of the world”.

Rebecca Lucy Taylor, better known by her stage name Self Esteem, said: “Without these changes, and these changes made soon, the UK music industry will be even further an arena for the privileged than it already is.

“Art made by those who do not need to earn a living. A very niche perspective, a deeply arid sonic and lyrical landscape. There’s a place for everyone’s voice, but to take away the ability to earn from sales, streams and then to take away the ability to tour? It means nobody without a financially comfortable situation can survive.

The UK music industry has not been helped by lengthy delays to the launch of a government-backed Covid cancellation insurance scheme, which was finally unveiled in August, more than a year after the film and TV production industry gained access to a similar scheme. It came too late for many events and festivals which had to cancel for a second summer running.

“We have listened carefully to UK Music’s arguments about a market failure regarding events insurance,” said Nadine Dorries, the culture secretary. “The UK music industry is one of our country’s great national assets, and I give my commitment that the government will continue to back it every step of the way.”

Njoku-Goodwin called for measures including tax incentives, scrapping restrictions on transport and work permits affecting the ability for musicians to tour in some European Union states and a permanent reduction in VAT on live music event tickets.

The annual report does not break out figures on the one bright spot for the industry during the pandemic – the streaming boom.

In the UK, music streaming surged by 22% last year to a record 139.3bn streams as global music sales grew for a sixth consecutive year to $21.6bn, with subscriptions to streaming services soaring as fans went digital to alleviate lockdown boredom.

The world’s biggest streaming platform, Spotify, added a record 31 million new paying subscribers last year. Subscriber numbers for Spotify, Amazon Music and Apple Music are expected to total 550m by the end of this year – up from 86m in 2015.