MOSCOW (Reuters) - Russian President Dmitry Medvedev said on Tuesday he was deeply alarmed that unemployment was rising far faster than officials had forecast.

The Russian economy, worth $1.7 trillion a year, is heading into recession and employers are slashing jobs as the economic crisis bites after a decade of explosive growth.

Medvedev, speaking to members of a think-tank that advises him on policies, said Russia had 2.2 million people officially registered as unemployed.

"We are deeply alarmed by the number of registered unemployed, which has already reached levels which we counted on reaching by year end," he said at a meeting with leading analysts of the Moscow-based Institute of Contemporary Development.

Medvedev is chairman of the board of trustees at the institute, some of whose researchers have criticized hardliners close to Prime Minister Vladimir Putin.

Fears that unemployment and falling living standards could trigger social unrest in the country, which has seen a decade of resurgence on the back of a strong economic boom, is the worst nightmare for the Kremlin at a time of global crisis.

Yevgeny Gontmakher, one of the institute's leading experts, shocked the public last November by publishing a scenario of how mounting social problems could trigger chaos in the country.

"Either we start modernizing Russia at once from economy to politics or we plunge into a crisis from which there is no way out within the existing constitution," he wrote in the report.

Russia, which accumulated over $500 billion in reserves during the boom, is investing heavily to keep afloat key enterprises and help ease jobless figures.

But during a conversation with Medvedev on Tuesday at an event open to the media, Gontmakher sounded more optimistic.

"We are not facing the problem of unemployment now," he said. "We need to talk about how to handle employment issues when we emerge from the crisis."

The head of the institute, Igor Yurgens, said the situation was under control.

"The situation is difficult but measures are being taken," he told reporters. "What we need to do today is to consider ways to make sure that after the crisis we have enough qualified workforce needed by the new economy."

Medvedev said unemployment was about 8.5 percent of the economically active population, still lower than the 13.3 percent reached after the economic crisis in Russia in 1998.

"This is not a target we should aim at indeed," he said.

There was no criticism of the government policies in the open part of the meeting, but some experts said that while helping poorest Russians most exposed to the crisis, the government should also think about the middle class.

Tatyana Maleva, an expert on social problems, told Medvedev that the crisis threatened a large group of Russians who are too poor to be seen as middle class but who are not classified as within the poorest 10 percent of the population.

She said about one fifth of Russians could be considered middle class. The Kremlin has said it will protect the middle class from the crisis as they are the natural supporters of Medvedev and Putin.

(Reporting by Oleg Shchedrov, editing by Tim Pearce)

www.reuters.com/article/gc07/idUSTRE53D3EA20090414