The German government left open on Tuesday the possibility of raising unemployment insurance contributions by more than planned in 2011 due to growing strains on public finances.
Germany is planning record net new borrowing in 2010 to cope with the impact of the economic downturn, and the Federal Labour Office expects to post a deficit of some 18 billion euros ($26 billion) next year as unemployment claims rise.
The government is already planning to raise unemployment insurance contributions -- split equally by employers and workers -- to 3.0 percent of gross pay in 2011 from 2.8 percent.
But the Sueddeutsche Zeitung daily reported Chancellor Angela Merkel's centre-right coalition was considering a bigger rise due to the strain on public finances.
"There will be a discussion about 2011 in light of economic developments in 2010," a Labour Ministry spokesman told a regular news conference when asked about the plans for 2011.
The government plans to transfer an extra 16 billion euros to the Labour Office in 2010 to bridge its funding gap, which has been swollen by a subsidy for firms who put workers on shortened hours rather than firing them.
The unemployment insurance debate highlights the strains on public finances in Germany, which emerged from its deepest post-war depression in the second quarter but is widely expected to face rising unemployment next year.
Finance minister Wolfgang Schaeuble has vowed to start making big budget savings in 2011 in order to bring the public deficit back in line with the European Union limit in 2013.
The government expects its deficit to grow to at least 5 percent of gross domestic product (GDP) in 2010, well beyond the EU limit of 3 percent.
The IWH economic think tank said it expected Germany would first comply with the EU deficit rules in 2014, a year later than Schaeuble is aiming for.
Senior allies of Merkel expressed caution on Monday about whether Germany could afford a planned tax cut in 2011.
