A government temporary lay-off scheme was launched on Monday for 1,400 workers at Fiat Auto's plant in Termoli, central Italy, according to the ANSA news agency.

The report said workers making engines will be temporarily placed under the scheme by March 20 - Fiat Auto has already placed part of its staff at other company plants under the so-called CIG scheme.

ANSA said the temporary layoff scheme allows workers to remain employees of the company but with a reduced salary paid by the Italian government's special layoff benefits fund. Employees are put on temporary layoff for up to 24 months with a possibile extension up to 48 months. The scheme is used during periods of low output or sharp fall-off in orders.

Trade unions are insisting that Italy's industry minister Antonio Marzano signs the €434 million ($US583.6 milllion) programme agreement for the Termoli plant, the report added.