Workers are worried about money, their jobs and are living under "tremendous pressure", according to a trade union study.
Unite said a survey of 50,000 of its members showed that Britain is becoming "divided and impoverished" and employees are increasingly forced into "insecure" working.
As well as job cuts, workers are also being hit by pay cuts and seeing an increasing number of agency staff being employed, said the union.
Unite published the findings to launch a campaign called Don't Break Britain, which will include support for community action against spending cuts.
Unite's new leader Len McCluskey said: "Never mind Nick Clegg's alarm clock Britain - this is alarm bell Britain. This is clear, unequivocal proof that working people striving to raise their families and do a decent job are being kicked in the teeth by this government.
"It is heartbreaking to hear of workers, who are not well paid, told their salaries will be slashed. It is take a cut or take a hike. What on earth has this got to do with growing our economy?
"Or to learn of the elderly and vulnerable who will lose the services that make every difference to the quality of their lives. Who gave Mssrs Cameron and Clegg the right to pull the rug out from under these people?
"This social vandalism will not create one penny in national wealth, in fact it will cost us in unemployment benefits and social despair.
"With bankers lining up to line their pockets while workers worry about every penny, we are not all in this together.
"This government is breaking Britain. There are more economically effective, more humane ways to address the deficit."