ABSTRACT
Labour market flexibility is considered an important factor in offering the best conditions for economic growth and competitiveness in society. Labour market flexibility, however, does not always correspond to workers’ needs for stable employment and sufficient income. The price of labour market flexibility is also wastage of productive potential through unemployment and underemployment, as well as a segmented labour market and labour market marginalisation. According to liberal orthodoxy, however, labour market flexibility is to be obtained by strengthening market forces and diminishing of state intervention and collective bargaining regulation, while a social democratic strategy aims to increase flexibility by collectivist regulative measures. The labour market is regulated by three different institutions and forms of regulation, namely the market, the state, and collective bargaining. Regulation of the establishment of an employment relationship is based upon the principle of contractual freedom, and legislation is very sparse except in respect of such special matters as discrimination.
