This article examines the changing role of the Swedish state in employment and welfare regulation in an environment that has become more market driven, commodified, and Europeanized. It begins with a theoretical reflection on the role of the state in capitalist development and a review of the recent debate on the spatiality of state regulation: the state as employer, redistributor, and arbiter, and as a shaper of employment relations and welfare. In the latter role, the state is conceptualized as employer, guarantor of employment rights, and procedural regulator, as intermediating neo-corporatist processes, as macroeconomic manager, and as welfare state. From this theoretical basis, the paper identifies changes in state employment and welfare regulation by comparing two periods: the original and mainly nation-state-based founding stage of the Swedish welfare and employment model as it developed after the 1938 Saltsjöbaden Agreement, and the period after Sweden’s accession to the European Union in 1995.