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The establishment of a free labour market for the first time in the Russian Federation has necessitated fundamental reform in the whole system of vocational education. This report analyses the process of reform and adaptation to the market economy being undergone by that system. The analysis begins with an examination of the interdependence between vocational education and the labour market and how the orientation towards a market economy has determined the new requirements for vocational education. The reform of the vocational education system and the State Standard which is to form the basis for a new model of vocational education are outlined in detail. In conclusion gradual reform is advocated so that negative social consequences may be avoided. Ten priorities for reform are suggested. The report argues for the development of a new system based on the Russian situation using the most valuable aspects of foreign experience. Appendices provide information on the development of vocational education from 1985 to 1994 and the State Standard.