This article analyses the behaviour of the Colombian labour market and the changes it underwent during the 1990s. It begins by outlining the reforms carried out in that country and summarizing macroeconomic developments and changes in the production structure in the 1990s. Then it uses data available from household surveys to analyse the dynamic of the labour market by economic sector, educational level and occupational position. After briefly describing the latest advances in research into income distribution in Colombia, it then shows the results of simulation exercises carried out to determine the effects of the changes observed in labour market conditions (sectoral structure of employment, relative wages, unemployment and labour force participation); on income distribution and poverty, both for the country as a whole and for the urban and rural sectors separately. The article concludes that the ability of the economy to generate employment has deteriorated markedly, and that this deterioration has affected lower-skilled workers most of all.