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STOCKHOLM (Reuters) - Sweden’s state employment agency said on Wednesday it would lay off a third of its own workers, in the first sign of budget cuts and reforms under a newly-formed government propped up by two center-right parties.

Social Democrat Prime Minister Stefan Lofven, a former welder and union leader, had to accept a program of tax cuts and labor market reforms to get the support of the Centre and Liberal parties, after failing to get a majority in September elections.

Part of the deal, known as the January Agreement, includes the privatization of many activities currently undertaken by the Public Employment Service (SPES).

“The January agreement means big changes in the Public Employment Service’s mandate. It will be smaller and more focused,” SPES head, Mikael Sjoberg said in a statement.

Around 4,500 of the 13,500 staff had been given notice, the agency said.

SPES budgets were cut in a finance bill that was pushed through by the Centre and Liberal parties during the post-election political stalemate in December, while they were still in opposition.