The proposal would see Italy's working week cut down from 40 hours to 32 in Emilia Romagna, northern Italy, effectively creating a four-day week.
Regional councillor and former labour law professor Piergiovanni Alleva, who is behind the bill, argues that the change could see as many as 200,000 new jobs created, Il Corriere di Bologna reported.
He admitted that "for various reasons" it is likely that the real impact would only be around 40 percent of this, but said that the changes would still "entirely absorb" unemployment in the region.
The bill is in its final stages before being presented to a local assembly.
In Emilia Romagna, there are 2 million people in employment and 160,000 job-seekers, according to the most recent available data. The proposed changes would significantly reduce this without "too much of a financial burden" on the region, Alleva claims.
The last time Italy's working week was changed was almost 40 years ago, when a reform abolished Saturday as a working day, cutting the week from 48 hours to 40.
Now, labour laws state that the average amount of time worked in a week - including overtime - must not exceed 48 hours. If employers are found to be flouting this law, they can face fines of at least €100 and up to €1,500 if several employees or incidents are involved.