October's jobless rate was seasonally adjusted from the original estimate of 5.3 per cent to 5.2 per cent. Last month's rate was the highest since spring 1976 when it hit 5.6 per cent. Underemployment climbed to 2.9 per cent from 2.7 per cent.

Most of the job losses were sustained in the decoration, maintenance, manufacturing, trade and external trade sectors.

In response to the worsening outlook, the Government raised to $50,000 from $36,000 the maximum limit on severance payments to workers laid off by bankrupt companies.

The move is expected to be submitted to the Legislative Council before Lunar New Year.

Secretary for Manpower Joseph Wong Wing-ping said the climbing jobless rate reflected the ongoing economic downturn in the third quarter, which the Government forecast would result in a seven per cent contraction in gross domestic product.

'Given the latest trends, it is likely that unemployment will stay at a relatively high level for the next few months,' Mr Wong said.

Unionists accused the Government of not doing enough to help the jobless. Elizabeth Tang Yin-ngor, chief executive of the Confederation of Trade Unions, said: 'They seem to not want to spend one dollar more than they have to to help the poor.

'They've only created 15,000 new jobs since they promised us in June they would create 100,000 by the end of next year. They're acting too slowly.

'Most of the jobs this Government has created are temporary work, like street sweepers and painters for schools. By now those people hired are probably unemployed again,' she said.

But Mr Wong said measures designed to create jobs had to be given more time to take effect.

The Labour Department estimated about 4,000 new jobs were being found each month, he said.