Sustainable growth has economic policies addressed to current imbalances as its necessary, though not its sufficient, condition. Labor markets are important for the growth process; as the level of economic activity increases, they function better, and as they function better, the level of economic activity increases further. Labor market flexibility is a key to both economic efficiency and social progress. Considerations of differences between countries has led to the conclusion that so far as labor market flexibility is concerned, no one package of measures exists that can serve all countries equally well. Six categories of factors affect the flexibility of labor markets: labor costs, conditions of employment, work practices and work patterns, rules and regulations, mobility, and education and training. Within each category are issues that provide levers for change. These issues are also related to the four widely recognized needs in Organisation for Economic Co-operation and Development countries, needs that call for greater flexibility, including labor market flexibility: economic adjustment, technological innovation, social problems, and quality of life. (YLB)