‘Catastrophic’ Data Flaws Leave Sweden’s Riksbank Furious

(Bloomberg) --

Sweden’s central bank has lambasted the country’s statistics agency after it emerged that months of jobless data were riddled with errors, potentially hampering policy decisions.

“What has happened is a catastrophe,” Riksbank Deputy Governor Henry Ohlsson said in Oslo. “Public statistics are the basis for economic, political decision making, and this is a sad story.”

‘Catastrophic’ Data Flaws Leave Sweden’s Riksbank Furious

Statistics Sweden, which has blamed a subcontractor for the issues, was forced to drastically cut its estimate for unemployment in September, according to a statement on Thursday. The jobless rate for that month was revised to 6.6% from 7.4%, and the agency has restated nearly all its data since July 2018.

The revisions coincide with a tense debate in Sweden on whether the central bank is right to target an interest-rate increase in December. Some of the bank’s board members had voiced skepticism, but Thursday’s revised labor-market data now give policy makers firmer ground on which to base a hike.

“When the figures from the labor force survey from July and August came in as they did, we raised our eye brows. We and many others saw it as very strange,” Ohlsson said.

The development may surprise those used to viewing Sweden as a stable, transparent country with impeccable institutions. The government, the central bank and Swedish economists all rely on Statistics Sweden’s labor force survey to make forecasts that shape policy. The jobless data also get included in economic growth estimates, which may now need to be revised.

Sweden’s government is equally incensed.

‘Catastrophic’ Data Flaws Leave Sweden’s Riksbank Furious

“I never would have dreamed it could be inaccurate in this way,” Finance Minister Magdalena Andersson told Swedish news service TT. The head of the statistics agency has been summoned by parliament, while Andersson said jobs data from Statistics Sweden would in future play a smaller role in shaping policy.

At the heart of the debacle is Evry, a consultancy firm hired by the statistics agency in 2017 to help with the phone interviews that form the basis for the labor market data. Statistics Sweden Director General Joakim Stymne told Swedish media that the decision to outsource the task was dictated in part by rising costs. Evry says it has enlisted EY to conduct a review into the “alleged deviations.”

Several reports by Aftonbladet, a tabloid, raise serious questions about Evry’s business practices. Employees reportedly had money docked from their salaries for going to the toilet during work hours. The call center is based in a basement at Evry’s offices in Solna, north of Stockholm.

“We are pressured all the time by the supervisors to work faster and there is a lot of fear among everyone working there,” one anonymous employee told Aftonbladet. “As we don’t have any employment security, we can lose our jobs at any time.”

A number of employees told Aftonbladet that they had regularly experienced events suggesting fake phone interviews had been sent in to Statistics Sweden as part of its labor force survey.

Evry has denied the claims, telling the newspaper it doesn’t yet know the reasons behind the quality flaws. Statistics Sweden has now stopped working with Evry.

Swedbank economist Cathrine Danin has voiced concern that the agency’s decision to now use a smaller sample will require looking at several labor market indicators to get a better picture of the job market.

©2019 Bloomberg L.P.

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