A functional labor market is considered essential for an efficient economy. The mission of every government should be to raise the well-being of its population. Precisely for the purpose of fulfilling the stated goals, it is necessary to balance between the flexibility of the labor market and the provision of social protection to employees. The labor market of the European Union has been marked by various changes in the last 15 years. With the arrival of the great financial crisis in 2008 and 2009, the number of adopted measures that can be classified in the area of labor market reform greatly increased in order to initially protect the nominal number of employees, and in the further course, after the economy would gain momentum, the number of workers' rights would increase. Observing the Republic of Croatia and its economy, we can classify it in the group of Mediterranean countries. The characteristics of such countries, in contrast to the countries of northern Europe, are far lower social protection of employment, a greater decline in the economy due to the recession and a longer duration of recovery, and thus a longer time for the implementation of measures aimed at economic recovery. With the accession of the Republic of Croatia to the European Union, it gained access to significantly larger funds that enable the implementation of projects aimed at restructuring the economy, which should be adequate for the green transition and the digitalization process.