Chancellor Rishi Sunak is “pondering a German style job retention scheme” to avoid mass unemployment once the furlough scheme ends on 31 October.
The Chancellor is weighing up the new scheme as part of a wider emergency support package as he is under pressure from unions.
The new plans could see the government and companies to share the cost of topping up wages for those who can only work part time, amid the pandemic.
Andrew Bailey the Bank of England governor said on Tuesday it is now time to “stop and rethink” the furlough scheme.
The Trade Union Congress (TUC) said the government must “fast track a new plan” in order to protect jobs.
TUC general secretary Frances O’Grady said, “We have published detailed proposals for a new short-time working and upskilling scheme.
“With the right approach we can stop mass unemployment scarring millions.
“My message to ministers is clear, let’s get around the table and fast-track a new plan.”
John Phillips, acting general secretary of the GMB union added, “Other countries have made a head start in offering support, protection and reassurance to industries as our economy stands on the edge of the abyss.
“The Treasury has promised creative action in this extended, unprecedented period – but time is short.
“Ministers must target support for industries, support for incomes and take action to save jobs.”
It is understood that Sunak pledged to be “creative” and is weighing up a number of possible measures to try and subsidise worker’s wages.
An option that Sunak is reportedly considering is a scheme similar to Germany’s Kurzarbeit, meaning shorter work time policy, under which firms can radically cut working hours in economic downturns with the state replacing part of their lost income.