Italy’s largest union, the CGIL, warned yesterday that state subsidies for idled factory workers urgently need funding or else the recession gripping the euro zone’s third-biggest economy could worsen.

More than a half million factory workers have collected a portion of their salary through the programme since the start of 2013, an increase of 12 per cent from the first quarter of last year, the CGIL said in a report published on Saturday.

The subsidies allow factories to slow or stop production during a downturn and workers to collect part of their salaries during the time they are inactive.

Italy’s three biggest unions will stage a joint protest in front of Parliament tomorrow to demand about €1 billion to finance the subsidies until the end of the year.

“Unfortunately the economic crisis has accelerated and worsened during the first few months of 2013,” CGIL chief Susanna Camusso said in an inter-view yesterday broadcast by Sky TG24 television.

“We have to find those resources not only to protect the income of those workers but also to avoid a further reduction to consumer spending that would in turn undermine production.”

Unions and the biggest employers’ lobby, normally at loggerheads, on Saturday held a conference together to call for an end to the political impasse, now in its second month, and the formation of a government.

The February election left Parliament split between three hostile blocs, none of which can govern alone, making an early return to the polls a growing possibility. Apart from funding for the worker subsidies, which Camusso said will start running out in June, a 1-percentage-point increase in value added tax will automatically come into effect in July if no action is taken.

“The gravity of the situation requires the formation of a strong and credible government quickly to turn around the economic and fiscal policy put in place for the past 18 months,” Giuseppe Bortolussi, head of CGIA Mestre small business lobby, said in a statement.

Caretaker Prime Minister Mario Monti’s austerity measures have worsened Italy’s recession, which started in mid-2011. Some historic indicators show the current slump is deeper than in 1929, at the outset of the Great Depression, CGIA Mestre said.

It is still unclear if opposing political forces will come to an agreement over the formation of a government or if there will be another snap vote. First Parliament must elect a new president in voting that starts on Thursday.

For constitutional reasons President Giorgio Napolitano cannot dissolve Parliament in the final months of his mandate, and his successor will have another chance to find a solution to the deadlock or else call new elections.

Comic Beppe Grillo, whose anti-establishment 5-Star Movement came in third in the national vote, yesterday said the centre-left and centre-right may seek a snap election to stop the economic reforms proposed by his bloc, according to a blog post.

But Grillo has repeatedly rebuffed, often in harsh terms, overtures from centre-left leader Pier Luigi Bersani to form a government.