Unemployment in Latvia could increase further next year before declining in 2011, according to the European country's prime minister.

Valdis Dombrovskis, who leads the ruling New Era Party, claimed that the European Union member state is presently home to more than 200,000 unemployed individuals, which is a figure that will stabilize in the next 12 months.

Speaking to Latvian Radio, the prime minister claimed that the government would be stimulating the economy and creating jobs in the long-term to reduce this figure, while also implementing a range of short-term measures.

The prime minister's view was supported by Baiba Pasevica, head of the State Employment Agency, who predicted that 2010's jobless rate could rise to between 15 and 16 per cent.

However, he told Baltic Course that any increases in unemployment will be less rapid than recorded in 2009.

''Most of the workplace and staff reductions have already been made. Furthermore, there are positive export trends taking place, and it looks like we have crawled out a bit from stagnation," he said.

Earlier this month, the government disclosed that unemployment benefits will be capped as of January 1st 2010.