Director of Labour resigns over falsification of employment data

The Norwegian Director of Labour, Ted Hanisch resigned in October 2000 after an inquiry found that the Labour Market Administration has routinely reported exaggerated figures for the number for people helped to find jobs. Jon Blaalid has been appointed temporary director, with a view to initiating a "clean-up" operation within the Administration.

The Director of the Norwegian Labour Market Administration (Aetat), Ted Hanisch, resigned from his post on 23 October 2000 after it was revealed that the organisation had for a long period provided false and exaggerated figures concerning the number of people it had helped to find jobs. An external audit, carried out by Det Norske Veritas, shows that 25%-30% of Aetat's labour exchange activities have been registered falsely according to its own procedural rules. The audit was initiated in September 2000 following claims in the media that the figures produced by Aetat were false. Mr Hanisch, who had wanted to stay in office in order to initiate a "clean-up" operation, resigned after a meeting with the minister of labour and government administration, Jørgen Kosmo. At the meeting, it became evident that Mr Hanisch would not be able to sort out the problems within the timeframe set by the minister. The director of Statskonsult, Jon Blaalid, will takes over temporarily as Director of Labour in order to examine the problems and resolve them as soon as possible.

Dubious practices in Aetat

It was the Norwegian Civil Service Union (Norsk Tjenestemannslag, NTL), the largest trade union represented at Aetat, which brought the problem of the falsification of figures to public attention in 1999. NTL pointed to the fact that many Aetat employees felt compelled to provide much higher figures than was actually the case with regard to the number of registered posts filled. NTL argues that the tradition of exaggerating employment exchange figures started in 1996 when Aetat introduced goal-oriented administrative procedures with increased demands for efficiency and greater pressures on employees to improve the number of posts filled and employees placed. This was coupled with the emergence of an unofficial internal competition between the labour exchange offices to achieve the best results. All this gave rise to the practice of registering false and exaggerated placement figures. The over-reporting has not, or at least so it seems, been carried out for financial reasons, since funds are not allocated on the basis of numbers of employees and posts matched.

NTL drew attention to the problem in an internal report to Aetat's management as early as in December 1999, in which it called for an end to the practice. Aetat did not initiate an investigation into the allegations until the NTL report was reported in the media in the autumn of 2000. The management claims to have been unaware of the extent of the practice, which was well known at the lower levels of the organisation.

New temporary Director of Labour

On the request of the minister of labour and government administration, and with a mandate to sort things out as soon as possible, Mr Blaalid took office on the 24 October 2000. Mr Blaalid had also been in charge of the committee which considered the recent new regulations governing private employment services (NO9809186F). However, his term of office is only for a provisional period until the problems within Aetat have been dealt with, and a new director appointed.

Mr Blaalid initiated the clean-up operation immediately after taking up office. In a newspaper interview, he argued that the situation in Aetat is so grave that it requires drastic measures, including the dismissal of employees found still to be falsifying figures. A plan of action has been worked out, which includes a thorough examination of all 129 local labour exchange offices in Norway, in order to do away with local arrangements and routines that do not correspond with the normal guidelines of Aetat. This process will be followed up by a new independent examination by an external body. Aetat will also produce a more precise definition of the concept of placement, in order to make it more tangible to the organisation's employees. New indicators for goal-oriented procedures will be introduced, which will better accommodate larger parts of Aetat's service activities. Finally, the new director also proposes to have an external body examine Aetat's other core areas of activity, such as the provision of statistics and data.

Commentary

Ted Hanisch had been at the forefront of the modernisation of the Labour Market Administration, while at the same time being an important contributor to the debate on national labour market policy. The way that Aetat has been run has been challenged significantly in recent years. Its traditional monopoly in placement activity has been challenged and come under threat from private placement agencies, including internet-based services. Aetat is also initiating its own service for temporary work placement, as a response to the government's decision to loosen the regulations concerning the hiring in/out of labour (NO9912168F). The organisation has recently strengthened its labour exchange service through the internet, and has also been actively involved in the recruitment of foreign health personnel for Norwegian hospitals. The Director of Labour also called for a relaxation of the regulations concerning immigration to Norway for employment purposes, in the light of the increasing labour shortages witnessed in many parts of the Norwegian labour market.

The extent to which the revelations will have further consequences for Aetat is not yet clear. The minister of labour and government administration has signalled that the scandal will not have budgetary consequences for Aetat in the 2001 state budget, but stresses that he expects everyone in the organisation to contribute in the clean-up process. The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) points to the fact that one of the pillars of the current cooperation on incomes policy in Norway has been a strong labour market administration, and further stresses that this was one of the preconditions set when the rules concerning private employment services and the hiring out of labour were changed in the spring of 2000. The Federation of Norwegian Commercial and Service Enterprises (Handels- og Servicenæringens Hovedorganisasjon, HSH), which organises private placement agencies, argues on the other hand that Aetat should now focus on regaining its credibility rather than directing its efforts toward establishing a public competitor to the private placement agencies. (Kristine Nergaard and Håvard Lismoen, FAFO Institute for Applied Social Science)