BERLIN -- A statistics scandal is undermining the public's confidence in Germany's ability to solve its nagging unemployment problem.

For years, the government unemployment office, or Arbeitsamt, has played a far larger role than private-placement agencies like Manpower Inc. in helping people find jobs. According to the government office's statistics, the agency had a placement rate of 50%. A recent audit, however, showed the real rate to be closer to 17%.

Just months before a national election, the disclosure has put the government under pressure, as voters increasingly question its ability to tackle structural problems in the economy. Amid these concerns, the government was expected today to further deregulate the market for private-placement services. With unemployment just under 10%, private job-placement services would appear a welcome addition. But until recently, the labor office has maintained a virtual monopoly over job placements. Despite efforts to introduce competition in 1994, the market has been hard to crack.

"There is a common misperception that those seeking a job have to pay us. We repeatedly have to tell people this isn't true," says Katja Hartmann of Manpower in Germany.

Some Germans also object to the idea that labor is something to be sold. "Understanding job placement as a service does not have a long tradition in Germany," says Holger Schaefer, a labor market expert at the industry-backed Institute for the Economy in Cologne.

Since 1994, 800 firms have sprung up in Germany. The industry estimates these firms placed nearly 150,000 people in jobs last year, up from nearly 3,000 placements in 1994. The labor office claims it found jobs for 3.8 million people in 2000.

The government loosened some regulation of private job-placement firms this year. A new law, known as Job Aqtiv, gives the registered unemployed the right to demand private-placement services if the local unemployment office hasn't found them a job within six months. This requires the unemployment office to pay the placement commission rather than the company that hires.

But there are still obstacles to such reforms. The labor office often views the private firms as competition and puts up hurdles.

"As far as we can tell, there hasn't been a single job placement as a result of the Job Aqtiv law," said Sieglinde Schneider, spokeswoman for the Personnel Placement Federation.

German trade unions on the labor office board oppose the change, fearing that hard-to-place unemployed individuals will be left to the labor office, while more qualified personnel go to private agencies.

"It's clear to me that the discussion is leading toward giving more responsibility to the private-placement companies, but I fear that will in the end hurt the larger pool of unemployed," says Horst Schmitthenner of metal workers union IG Metall.

Industry has long demanded greater liberalization of the job-placement market. In the wake of the statistics scandal, it is now calling for streamlining the labor office.

"We don't want to get rid of the labor office job-placement service. Then it would only pay out unemployment benefits," says Juergen Wuttke, a labor market expert for the employer's group. "We want to get rid of tasks that have nothing to do with job placement."

Germany's attitude toward the unemployed also is changing. A government-sponsored study released last month suggests that as many as a third of those registered as unemployed aren't looking for work. Some collect benefits while in between jobs, and others find that their benefits pay more than another job. The government has yet to attack such imbalances in unemployment and welfare benefits that may discourage people from seeking work.