"Jobs that require little or no education will first be filled by the unemployed who are already in our country," Social Democratic leader Stefan Lofven told reporters in Stockholm.
In 2016, the country granted work permits to more than 12,000 people from countries outside the EU.
This figure includes around 4,000 unskilled labourers such as cleaners, chefs, waiters and waitresses and mechanics, according to the Swedish migration board.
"It's unreasonable for us to have a labour migration that consists of dishwashers (and) restaurant employees when we have capable people who have arrived here as refugees," Lofven added.
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Lofven said there were 100,000 jobs available in Sweden and some 300,000 jobless workers.
Labour migration should therefore be limited to professions where there is a lack of skilled labour, he said.
Around four per cent of people in Sweden aged 15-29 were either unemployed or not attending school in 2016, according to Statistics Sweden.
The Social Democrats run a minority government with the Greens Party, which opposes the plan, making it unlikely for Sweden to restrict labour migration before the September 2018 election.
"It's more likely that this will be a (Social Democratic) election promise instead of forcing the Greens to agree," he said.
The Social Democrats have traditionally had a large working class voter base, and Lofven's comments were seen as an attempt to win over voters fleeing to the anti-immigration far-right Sweden Democrats.
According to a poll conducted between January 23 and February 19 by public broadcaster SVT, the Sweden Democrats were the third-largest party behind the Social Democrats and the opposition conservative Moderates.
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