(Bloomberg) -- Sweden’s unemployment rate rose more than expected in April as the effects of the Covid-19 crisis continued to wreak havoc across the Nordic region’s biggest economy.

The seasonally-adjusted jobless measure increased to 7.9% from 6.7% a month earlier, Statistics Sweden reported. Economists were expecting a rate of 7.8%, according to the median of seven estimates from a Bloomberg survey. The unadjusted rate rose to 8.2% amid a sharp drop in the number of hours worked, mainly within the hotel and restaurant industry.

What Bloomberg Economists Say...

Unless demand picks up shortly, unemployment could rise as high as 17%. That’s how high the unemployment rate would be if all the workers in the government’s furlough program were counted as unemployed.

--Johanna Jeansson

The worsening jobless data comes at a difficult time for the Social Democrat-led government. Next week the administration is expected make public the results of an inquiry into labor market reform, which was set up at the behest of its budget allies after the general election in 2018.

Included in the proposals are regulatory measures that will make it easier and less costly for employers to fire workers, according to a report by state broadcaster SVT on Sunday.

The proposal has sparked fury among the country’s union leaders and opposition political parties, which are threatening to oust Prime Minister Stefan Lofven if it becomes law.

The Left Party Leader Jonas Sjostedt told SVT that his party would call for a no-confidence vote in the prime minister were he to push through with the new legislation -- something the leader of the Moderates, Ulf Kristersson, said he would also back.

“This is the worst attack on job security in decades,” Sjostedt said. “I hope the government is wise enough, during a time like this when so many are losing their jobs, to throw the proposals in the bin.”

Read More: Sweden in ‘Very Deep Economic Crisis’ Despite Soft Lockdown

(Adds economist comment.)

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