The German government has prioritized job creation as one of its main aims for 2010 in its budget for next year.

Chancellor Angela Merkel, who leads a centre-right coalition, has disclosed that Europe's largest economy will increase borrowing in 2010 to allow the labor ministry to raise spending, the New York Times reported.

Specifically, the budget predicted that unemployment payouts will rise in 2010 as the country's jobless workers struggle to obtain long-term employment in a recovering economy.

Speaking during a debate on the country's spending plans, Wolfgang Schauble, German finance minister, claimed the government has no other option but to increase borrowing to support these measures.

According to the newspaper, he said: "It was, is and will remain right to do everything to prevent this dramatic economic situation from becoming worse."

Germany's unemployment rate declined in November to 7.6 per cent of the labor market as the number of jobless workers fell by 13,000 individuals, according to the federal labor agency.