German Labour Office eyes 17.8 bln euro 2010 defict

BERLIN, Nov 7 (Reuters) - Germany's Federal Labour Office will likely post a deficit of some 17.8 billion euros next year due to the strains of the economic crisis, it said on Saturday. A spokeswoman for the Office confirmed media reports it would rack up the shortfall as it picked up the tab for rising job losses and government measures aimed at supporting the labour market during the country's sharpest post war slump. Germany has avoided major lay-offs in the crisis in great part thanks to a subsidy -- paid by the Office -- for firms who put workers on shortened hours rather than firing them. So far the measure has proved effective, and unemployment has fallen for the past four months, adjusted for seasonal swings. Next year, analysts expect unemployment to rise. The subsidy has already put a strain on the Office's budget, and the government plans to transfer it an extra 16 billion euros next year to meet the shortfall. The remaining sum will be covered by the Office's reserves, it said. Total outlays by the Office in 2010 would amount to almost 54 billion euros, German weekly Der Spiegel reported, citing a draft of the authority's budget plan. Total revenue is expected to be some 36.1 billion euros, the magazine added. In 2009, the Office, which is funded largely by social security contributions, has said it will be able to cover its budgetary deficit with its own reserves. The government has forecast the German economy, Europe's largest, will contract by around five percent this year, before posting growth of some 1.2 percent in 2010. (Reporting by Klaus-Peter Senger, writing by Dave Graham) Keywords: GERMANY LABOUROFFICE/ ([e-mail]; Reuters Messaging: [e-mail]; 49 30 2888 5217) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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