Contents of the paper's theoretical part try to explain concepts related to the labor market and the policies that are influencing on it, continuing through the analytical part by creating an analysis of the labor market of the Republic of Croatia and how it compares to the state of the matter of the European Union. The labor market is one of the most complex and sensitive markets. The basic indicators on the market are considered to be the working-abled population, labor force, and the employment and unemployment rates. The labor market of the Republic of Croatia is characterized by a low rate of employment, shortages in the labor force, financial insecurity and dissatisfaction of employees and a high rate of unemployment in the younger generations. Unemployment is conditioned by the economic and financial crises and the lack of structural changes within the economy itself. Institutions and the labor market policies have an important role, and their purpose precisely is to lower the rate of unemployment.