Local prosperity and the quality of life depend on efficient labour markets, which can meet the needs of both the labour force and businesses.  Skilled workforce nurtures economic development and contributes to the diversification of the economy.  In turn, the availability of employment and training opportunities is essential to keeping the young people and attracting talents, thus contributing to the vitality of a local area.

Labour market policy is one of the main instruments of government to promote labour market efficiency and contribute to more and better employment, and for all groups of the population whatever the local conditions.  Through various tools and programmes, labour market policy plays a powerful role in supporting integration on the labour market, job retention, progression in employment, tackling skills shortages and meeting future business needs.

To enhance the impact on labour market policy on the local economy, many countries are undertaking to improve local governance.  Two tools are used to achieve this:  decentralisation and partnerships.  Both have been studied by the LEED Programme recently.  LEED is now undertaking a study on the ways of integrating labour market policy and economic development at local and regional levels.

Local initiatives are also set up to supplement labour market policy.  In many countries, there is gap between the public employment service and the vocational training system, which leaves many low-skilled workers vulnerable to loosing their job.  Local initiatives are taken to help them upgrade their skills and progress on the career and pay ladder.  Similarly, immigrants face obstacles when attempting to integrate the labour market.  Both the issues of skills upgrading and integration of immigrants are currently being studied.