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This paper reviews the enormous political, social and economic changes which have resulted from the collapse first of the Berlin Wall and later of the Soviet Union, and the effects these changes have had on labour markets in this region. The demands for skills and knowledge have changed considerably since the collapse of the highly centralised Soviet system of agriculture and industry as emerging countries in the region try to adapt to the changed circumstances. The author suggests that in most of the countries of Central and Eastern Europe long term unemployment, especially among young people, is a serious problem. The paper looks at the educational processes in place under the Soviet system and the changes that need to be made for people to acquire the skills and knowledge necessary for participation in the labour market, small enterprises and the informal sector.