The labor market is a place where the supply and demand of workplaces make employment possible in particular society and it determines the basic payment level for certain jobs,while the supply of labor market are workers and labor demand are employers. In Republic of Croatia, in the last few years, the economic situation had a negative effect on the labor demand, which is reflected in the fall of GDP, insufficient level of industrial production and labor productivity and in lower number of companies. All that is caused by abolishment of workplaces, resistance to technological changes and high labor costs, while the labor supply was negatively affected by decrease of the working age population, too low salaries in comparison with the amount and quality of the work, amount of unemployment benefits and labor force characteristics, namely: education, age and sex. So, in this thesis are analyzed characteristics of the Croatian labor market whose negative trends are caused by by the economic crisis and the lack of structural reforms in the economy, namely: high unemployment rate, long-term unemployment problem, low economic activity rate of population and high mismatch of supply and demand for work. Considering that, Republic of Croatia is currently among the three lowest-ranked members of the European Union, according to the seven key indicators of the labor market. The basic conditions for the recovery of Croatian labor market are timely macroeconomic policies and better investment climate which encourage new investments, opening of workplaces, and reform an integral system.