Pestoff (2006a) argues that the Swedish welfare state faces three major democratic challenges at the beginning of the twenty-first century that are crucial for its sustainability. The public sector in Sweden suffers from an abysmal work environment due to drastic cutbacks in public finances in the 1990s that also led to deteriorating quality of public services; declining citizen participation in most walks of political life; and permanent austerity in terms of funding welfare services. In order to reverse the situation Sweden must resolve these three interrelated challenges by:

1 improving the service quality and enriching the work environment of those providing welfare services;

2 increasing possibilities for citizen participation in and allowing them more control of the services that they demand and pay for through taxes and user fees;

3 finding new ways to provide public financed universal welfare services without major increases in taxes or user fees.