Several Tory MPs are promoting the introduction of 'mini jobs' which allow people to work without paying tax or national insurance in a bid to boost Britain's ailing economy.

It is based on a German scheme, where employees can earn up to €400 (about £314) a month without sacrificing any of their salary. Employers only pay a flat rate to cover pensions, social insurance and wage taxes.

Those enrolled in the scheme can take on several mini-jobs at once - up to the €400 a month tax-free limit, with a reduction of unemployment benefit over a certain threshold being the only impact. Between €400 and €800, workers pay tax on a sliding scale.

Introduced in 2003 as part of a wide-ranging labour market reform by social democratic chancellor Gerhard Schroeder, it has seen Germany boast some of the lowest unemployment rates in Europe. But critics claim mini-jobs have locked elements of the workforce into low-wages and reduced the number of full time jobs.

Figures from the German Employment Agency show that over 7m Germans - one in five of all employees - held "mini-jobs" in September 2010 - a rise of 1.6m since 2003. And the numbers of people taking on "mini-jobs" to boost family coffers, rose from 1.3m in 2003 to 2.4m in 2010. Women make up nearly two thirds of "mini-jobbers" with most "mini-jobs" employment concentrated in low-skill service sectors such as hospitality.

George Osborne is said to be looking at the idea, but Lib Dem business secretary Vince Cable is said to be much cooler about its merits.

Conservatives in the Free Enterprise Group, which includes Elizabeth Truss and Dominic Raab, are long-term evangelists for the "mini-jobs" scheme.

Currently, employees in the UK can earn £8,105 a year before they have to start paying tax - some £675 a month. Any new UK cap would need to be higher than the Germany model.