BERLIN German unemployment, which has been falling for nearly 10 years, is expected to drop further in 2017, despite the influx of nearly a million migrants last year, the research arm of Germany's Federal Employment Agency said on Thursday.
The agency's Institute for Employment Research (IAB) said it expected about 2.62 million people to be jobless in Europe's largest economy in 2017, a drop of 70,000 people from 2.69 million this year.
Germany's working population is expected to rise by 480,000 to 44.03 million, including a record 31.93 million people who will be subject to social insurance deductions, the institute said.
That would be 5.6 million more people than during the peak unemployment period in 2005, when 4.86 million were jobless.
"Given the massive challenges associated with the integration of refugees, the positive developments on the unemployment front are noteworthy," said Enzo Weber with the government research institute.
Unemployment has fallen steadily in Germany over all but two of the past 10 years. It is expected to drop by 110,000 to 2.69 million in 2016.
The Federal Labour Office reported last month that unemployment fell more than expected in August, and the jobless rate remained at 6.1 percent, the lowest level since German reunification in 1990.
In coming years, the integration of refugees into the labor market could lead to temporary increases in unemployment, the institute said.
Migrants were expected to account for 90,000 of the country's jobless both this year and next, while increasing the ranks of the working population by 80,000.
"If the integration of refugees succeeds, the working population could increase significantly over the medium term," the report said.
(Reporting by Holger Hansen; Writing by Andrea Shalal; Editing by Robin Pomeroy)