The analysis of higher education in the Republic of Croatia undoubtedly shows a need for a complete restructuring. The restructuring process needs to be implemented on more than one level, but it is essential to start with the analysis of the labor market demands. The labor market, as well as any market, is a complex phenomenon which reflects different dimensions of the social analysis and the analysis of social processes. Higher education systems must respond to the labor market demands. This thesis explores the dimension which shows the relation among the competitiveness of companies, labor market and higher education as a tool for the improvement of competitiveness. A basic characteristic of modern economy is knowledge as a basic promoter for the creation of new economic values, the improvement of society as a whole and the shift of the competitiveness of companies in the labor market competition. Since knowledge is still a hazy concept, we will focus only on the forms of knowledge which are easily detectable and can be tied to the competitiveness of companies. These connections are an indicator of the path which the restructuring of the higher education system must take. The fluid concept of knowledge has been identified in this thesis by primarily using the following categories: skills, cognitive processes, competences, responsibility and communication. All of the five categories are easily recognizable in all the suggestions for restructuring. The category of skill partially includes the presently traditional understanding of the concept of knowledge; however, skill means more than that. It implies immediate implementation of knowledge. We are aware that such definition of the concept of skill questions the majority of current educational paradigms. The cognitive processes category demands the teaching content in higher education systems to train the individual to both accept the existing methods and criticize them, as well as create new, necessary methods. The competences category is a synthetic category which is formed as a result of the actions of other categories and, ultimately, is a final product of the education process. The ability to identify competences conditions whether we will declare a particular educational process, and the system as a whole, successful or not. The responsibility category implies the social responsibility of the educational process. It is basically an ethical category; its existence is necessary because ethical acceptability of the outcome of the educational process is the necessity of accepting higher education system (and any education system in general) in the context of social relations. Ethical outcome of the educational process must be socially acceptable. Communication is the connection between all the above listed categories which, ultimately, links them into a unique whole. The system must remain open to all future changes and interaction with users, no matter the level of connectedness between all of the categories. Transfer of knowledge is necessary both synchronically (between the existing participants) and diachronically (between future participants) in a time which inevitably demands changes. All five categories listed in this work are perceived as a model (paradigm) of the analysis of existing documents which define the structure of the higher education system in the Republic of Croatia. Critical reading of these documents is the core of the qualitative research conducted for the purpose of this thesis. The results of the research have served as a basis for determining the necessary directions of the restructuring of higher education system with the aim of strengthening the competitiveness of the Croatian economy.