There are grounds for the claim that the imposition of restrictive regulations concerning dismissals and the existence of high extra-salary costs have led in Poland - a country with strong trade unions that at the onset of the transformation of the political and economic system obtained extensive privileges and rights - to the emergence of the insider-outsider labor market. The article brings a preliminary analysis of the mechanism and consequences of the functioning of this type of labor market. With this aim in mind the author discusses the significance of the regulation of the labor market with special emphasis on employment protection legislation and the sources of the strong position of employees' organizations. It is argued that the formation of an insider-outsider type of labor market not only discriminates the unemployed and other outsiders, who have problems finding employment or being employed on the basis of the labor code, but also hinders the process of restructuring - transition from the manufacturing sector to the service sector - and slows down socio-economic development. In this context attention is focused on the importance of liberalization of the labor market and the character of the conflict between the demands of modern economies (flexibility) and the sense of employment security and stability. .
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