Special issue The article, based on a recent book by the two authors, attempts to give the answer to the question whether persistently high unemployment in Central and Eastern Europe is to be attributed to the rigidity of their labour markets. After defining the concept of labour market flexibility, the article discusses the incidence of flexible forms of employment in the region. The analysis shows that Central and Eastern European labour markets have increased their flexibility, but the forms of flexibility are different from those to be found in the OECD countries. Correlation of labour turnover with business cycle suggests a counter-cyclical movement of labour turnover, which is opposite to developments in the OECD countries. This is to be explained by high job, employment and income insecurity perceived by workers in transition countries contrasting with much higher confidence in the labour market and in assistance provided by labour market and social welfare institutions enjoyed by their colleagues in industrialized countries. Comparisons of the strictness of employment protection legislation in the group of selected transition countries with the EU countries indicate that on average employment protection legislation is similarly liberal/rigid as the EU average. The econometric analysis identifies significant correlation between the level of employment protection on the one hand and the employment rate and the labour market participation rate on the other but with opposite signs for the two groups of countries. While in the OECD countries stricter employment protection tends to have a negative effect on employment and labour market participation, in transition countries the results indicate that more protection could contribute towards improving employment performance and higher economic activity of people in the formal sector of the economy. All selected labour market indicators-labour market participation, employment, unemployment, youth unemployment and long-term unemploymentare positively affected by collective bargaining and active labour market policies,

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The global financial crisis deeply impacted labour markets around the globe. In the case of the United States, some commentators have argued that the subsequent rise in unemployment exceeded previous estimates of the elasticity of the unemployment rate with respect to output growth, a statistical relationship known as Okun's law. In contrast, others find a stable, long-term estimate of Okun's coefficient implying that the deviation in unemployment during the crisis resulted from a larger output gap (not a structural shift in the trend). Ultimately, estimates of this relationship will depend on the methodology and data period utilized. Focusing more on short-term fluctuations, changes in unemployment are decomposed to identify the association with other channels of labour market adjustment (hours, productivity and labour force). Results presented in this paper confirm the crosscountry variation in the responsiveness of unemployment in the wake of the Great Recession. In the United States, Canada, Spain and other severely affected economies, estimates of Okun's coefficient increased sharply, departing from precrisis levels. In other countries, where unemployment has remained subdued, such as Germany and the Netherlands, the coefficient has fallen dramatically over the shortterm. While other factors can explain the heterogeneous impact of the global financial crisis on labour markets in OECD countries, this paper focuses on the contribution of labour market institutions (employment protection legislation) in explaining crosscountry differences and shifts in the estimated Okun's coefficient. In this regard, empirical evidence confirms that the responsiveness in the unemployment rate during the global downturn was lower in countries where workers are afforded greater employment protection such as Germany.

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