The economic reforms applied in the region during the 1980s and 1990s created expectations, for which there was theoretical justification, of strong job creation and greater equity in the labour market. This article analyses developments in the quantity and characteristics of employment during the 1990s. It concludes that today's labour market problems are due to insufficient economic growth and to less intensive use of labour, resulting mainly from changes in tradable goods-producing activities. Modernization of production methods in companies and sectoral restructuring that increased the weight of tertiary activities contributed to segmentation of the labour market on the basis of people's level of education, as the demand for labour shifted towards those who had passed through intermediate and higher education. People with less formal education had less access to wage employment and wage differences between skilled and unskilled workers widened. At the same time, wage differences between microenterprises and larger ones increased and, with employment relationships becoming more flexible as well, employment quality indicators tended to worsen. All these tendencies were contrary to what had been expected from the reforms. Sectoral restructuring of employment helped trigger a trend towards increasing heterogeneity in the labour market, and this took a variety of forms: substantial and simultaneous job creation at the top and bottom of the employment structure, a widening of the gap between formal and informal activities, differentiation of working conditions within medium-sized and large firms, and internal differentiation among microenterprises and own-account workers.