The official rate of unemployment in Switzerland has hit the highest level since the start of 2005, though observers have expressed optimism that the labor market will bounce back in 2010.

According to the latest data released by the State Secretariat for Economic Affairs (SECO), the national rate of unemployment hit four per cent at the end of October, up from 3.9 per cent at the end of the preceding month.

At the same time, the figures also revealed that growing numbers of Swiss workers are seeing their hours reduced as employers continue to tighten their belts in the wake of the global economic downturn.

Despite this, some observers have predicted that the situation will pick up over the next few months, with the anticipated rebound in the Swiss economy leading to new job opportunities being created.

"The employment situation is still deteriorating but at a slower pace, which is good news," Reto Huenerwadel from UBS told Reuters.

"This is the most lagging of all lagging indicators, but even so unemployment may not reach the worse case assumption of six per cent."

Switzerland remained in recession in the third quarter of 2009, with domestic construction and retail sectors continuing to struggle from low levels of consumer confidence.