Subject and purpose of work: This article presents the analysis and assessment of the labour market at the time of implementing the system of market economy in Ukraine. The analysis is conducted based on the principles of new institutional economy. The objective of the study is to identify the main trends of the economic development and labour market to analyse public policy in the area of employment and provide some of recommendations for improving labour market in the current socioeconomic conditions. Materials and methods: The study has been based on the available statistical data as well as national and foreign literature with a particular focus on the new institutional economy. Also state legislation concerning labour market and employment in Ukraine has been referred to. Results: The analysis and assessment of the status of employment and the functioning of labour market in Ukraine concerned the period from 2010 to 2014. Until 2013 both the number of employment and the employment rate increased slowly but systematically. In 2014 a rapid labour market collapse occurred. Conclusions: Transformations of labour market and rationalisations of employment are related to structural transformations and the implementation of the system of market economy. New legislative basics and institutional changes ought to be continued while taking into account the need of qualitative changes and purposeful shaping of policy of labour market expansion.