Swedish labour market policy faces major challenges. Sweden has a labour deficit and a very low unemployment rate at the same time as unemployment is high among young people and immigrants. Unemployed in Sweden with high thresholds to enter the labour market are referred to the local labour market policy where the municipalities co-operates, competes and negotiates with the Public Employment Service (PES). The purpose of this study is to understand the organizational boundaries between PES and the municipalities and how these boundaries affects the local labour market policy in eleven municipalities. We have carried out semi-structured group interviews with managers. The boundaries between PES and the municipalities are vague and require negotiations regarding resources such as the unemployed, different forms of activities offered to the unemployed and economic resources. Clearer boundaries would generate conditions that offer unemployed people a strategic organization of the local labour market policy with enhanced co-operation and adaptation to common goals instead of competition and large amount of time spent on negotiating.