Safilo is reducing production in Italy and Slovenia, shutting down an Italian plant and laying off 1,250 people.
The company said it would be shifting some production operations to China, but would not lose its 'Made in Italy' label.
Eight hundred of the redundancies are reported to be in Italy. According to Reuters, Italian industry minister Claudio Scajola said the government was following the matter and 'would do its part'.
Safilo's net debt was €570m at the end of 2008 and Reuters quotes financial analysts as saying it needs a capital injection of around €250m.
The company closed 2008 with a 71 per cent fall in net profit. Its main shareholder, Only 3T, controlled by the family of chairman Vittorio Tabacchi, is reported to be talking with potential investors.
A Deutsche Bank note said: 'The situation at Safilo seems to be deteriorating rapidly and is looking increasingly tough.'