"The right-of-centre government is putting forward hardly any new proposals to parliament, they're instead embroiled in attacking each other," Löfven said about the four political parties that form the Alliance government.
He further said that the infighting and lack of concrete policy-making was damaging to Sweden by fostering despondency about the country's ability to compete on the global market.
He also said it paved the way for the anti-immigration Sweden Democrat party to entice new members and to grow its voter base.
"The coalition parties don't seem to be able to, want to, or even have the energy to take on today's challenges," he said.
"As far as the government is concerned, it's always someone else's fault. If it's not the EU, it's the fault of immigrants."
Speaking to The Local, Löfven said Sweden had to get better at benefiting from foreign-born job seekers' education and experience.
"We've seen in several surveys that if you have a foreign-sounding name, Swedish employers might not even invite you to an interview," he said.
"It is idiotic that Sweden doesn't use the resources at its disposal."
He further said that while Euro scepticism had also reached Sweden due to the financial crisis, any talk of a Swexit, in the mould of a union membership referendum proposed in the UK, would ultimately be damaging to Sweden.
"We need to make people feel that not only is the EU important but we can change how it works," he told The Local.
"We need a competitive continent, which will benefit Sweden and Swedish jobs."
Löfven spent a large part of Wednesday's press conference reiterating that the welfare state and employment were part and parcel of the same goal, to keep the Swedish standard of living among the world's highest.
He accused the government of structural wage dumping by wanting to introduce one-year high school programmes and have certain courses that do not give students the opportunity to go on to further education. Such measures would ultimately dump wages across the board, he warned.
The traditionally labour party said its proposals would also benefit the middle class in Sweden.
"For the middle class, a decision to study further should benefit your career, we want mobility on the labour market," he told The Local.