MP Bill Esterson has criticised the government's new jobs protection scheme, saying it "looks like a plan designed so that no one will want to use it".
The MP for Sefton Central and Shadow International Trade Minister said the plan for the government to support workers who work at least one third of their usual hours, means businesses will pay more to keep on two members of staff part time than one full time.
Mr Esterson said that rather than a plan for jobs, the scheme was in danger of becoming a plan for "mass unemployment" and needed a rapid adjustment.
The Chancellor Rishi Sunak has announced that from November 1 the Job Support Scheme would replace the Coronavirus Job Retention Scheme.
The new scheme will be applicable to staff who are able to work a third of their usual hours. Staff will be paid by employers for the hours they can work. The Government and the employer will top up wages for any hours not worked.
The Chancellor has said that employees who work 33 per cent of their hours will receive 77 per cent of their full pay.
The scheme will last six months.
The previous, more generous, Job Retention Scheme, also known as "furlough", which will end on October 31, initially paid 80 per cent of an employee's salary, up to £2,500 per month, reducing to 60 per cent currently.
Furloughed employees do not have to work any hours to qualify, but may work some hours, with the government supporting the pay for the hours they do not work.
The self-employed have been able to access the self employment income support scheme (SEISS), which has paid up to 80% of trading profits for those earning under £50,000 per year on average for the past three years.
From November 1 that support will reduce to just 20% of normal trading profits for three months.
As well as receiving help from the new job support scheme, companies that bring back workers from furlough will also be able to claim the Job Retention Bonus, where the government pays £1,000 for every furloughed employee who comes back to work until at least the end of January.
Around three million workers, thought to be around 12 per cent of the UK workforce, are currently fully or partially furloughed.
Mr Esterson said: "The Chancellor's announcement is just too little too late. There are thousands of workers who have already been handed their redundancy notices, and this will have ended the hopes of thousands more, particularly in industries like events and hospitality which are being restricted from operating right now due to Covid. How do these businesses pay even a third of an employee's wages, never mind 55 per cent?
"Labour has been calling for targeted support for the worst affected industries, and for support for those three million people who have so far received nothing and have not been eligible for any help.
"To ask firms to pay 55% of the wages of a staff member who only works a third of their usual hours makes no sense. It means it is more expensive to bring back two workers on a third of their normal hours than one worker on full-time hours. It is cheaper to bring back two employees on a third of their hours and pay them a third of their hours, than to use this scheme and have their wages topped up.
“It actually incentivises employers to keep some staff on but make others redundant and it incentivises employers not to use the scheme. It is like the Chancellor has deliberately devised a scheme no one will want to use. This is not a plan for jobs, it's in danger of being a plan for mass unemployment.
"And still there is nothing for the three million workers who have been excluded from all help up to now. The government should learn from Germany where the job support scheme pays more than three times as much and is until at least the end of next year.”