Unemployment in Germany averaged 8.2 percent of the workforce last year, with a total of 3.42 million unemployed, the Federal Labor Agency said Tuesday. That represented an increase from the 2008 level of 7.8 percent, a trend that was also seen month-on-month.

The raw number of jobless in the country in December 2009 was 3,276,000, and experts expected a further rise in January.

"After three months of declining unemployment numbers, it was only a matter of time before German unemployment would increase again," ING senior economist Carsten Brzeski said.

"Unemployment should continue to increase until mid-2010 and should peak at around 3.8 million," the economist predicted, which he noted would be well below the peak of 5.2 million generated by Germany's last recession in 2002-2003.

"Despite the deep recession, the labour market in 2009 remained robust," Federal Labor Agency chief Frank-Juergen Weise said. He added that while the jobless numbers rose last year, the increase was not as much as feared.

Short-time work saves the figures

One the main reasons for the relatively good news is a short-time work scheme that has kept more than a million workers on state-subsidized reduced-hour payrolls. Data also shows that Germany benefited from a net increase in new companies last year.

The government-subsidized contracts have helped German employers avoid large-scale layoffs as a result of what has been the nation's steepest economic slowdown in a generation.

But Weise predicted that the number of employees on short-term contracts will total about 600,000 this year, which is about 400,000 less than in 2009.

While Berlin has announced it was planning to extend the subsidized contracts scheme for another year, it has limited the subsidy support to 18 months, instead of a previous allowance of 24 months.

Germany's relatively rigid labor market and the government's boost appears to have averted a sharp rise in unemployment amid the global economic slowdown, but "whether such a labor market can be a growth driver during the recovery is another story," Brzeski said.

"However, with the improving economic outlook, gradually filling order books and increasing demand for new labor, it looks as if the threat of exploding unemployment rates has been averted," he said.

bk/AFP/dpa
Editor: Sonia Phalnikar