German workers are disgruntled about labour reform

Many economists had predicted the rise to be half that amount, especially as employment is usually up in spring.

The disappointing news comes as the United States reports signs of strong employment growth.

German Chancellor Gerhard Schroeder has introduced reforms to quicken job placement and encourage the unemployed to take up self-employment or training.

High labour costs

But the Labour Office said the measures were not enough to reduce the impact of the weak economy.

"The labour market situation has worsened against the backdrop of a continued weak economy. On a seasonally adjusted basis, employment in January has fallen noticeably and unemployment in March risen sharply," officials said.

Seasonally adjusted unemployment in western Germany rose by 31,000 and by 13,000 in eastern Germany.

High non-wage labour costs, which have surged since reunification in 1990 means that firms are reluctant to hire new employees in Germany.

Instead, many are creating jobs at overseas units where costs are lower.