A study was conducted to determine what factors account for the wide Canada-Sweden literacy gap, and what lessons can be learned from such a comparison that may help reduce the incidence of low literacy skills in Canada. The study found that the incidence of low literacy skills (failing to exceed level 2 in all three literacy domains--prose, document, and quantitative) was twice as high among non-immigrants under age 65 in Canada (29 percent) as in Sweden (14 percent). The study also found that most Swedish youth start their working lives with at least a minimum of literacy skills, regardless of level of education, while Canadian youth are highly likely to have low literacy skills unless they continue into postsecondary education. The findings suggest that the Swedish education system may be more successful than the Canadian education system in equipping individuals with literacy skills by the time they leave high school and that Canadians engage less frequently in activities (such as volunteer work, lifelong learning, and using libraries) than Swedes. Among the factors contributing to high literacy skills in Sweden are a society that promotes adult learning among persons with a low initial level of education; strong unions that promote literacy through study circles; and foreign films and television programs that are subtitled, providing a reading refresher even in low-literacy homes. The study suggests these areas that require more policy attention in order to narrow the Canada-Sweden literacy gap: (1) the adequacy of primary and secondary education; (2) the necessity to maintain and upgrade skills throughout life; and (3) increased literacy by promoting volunteer activities and encouraging the use of public libraries among youth. (Contains 12 references.) (KC)