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While labour adjustments issues are generally analysed through adjustments in the external labour markets, the focus of this report is on adjustments within the internal labour markets of firms through their workplace and human resource practices. The internal labour market dimensions include, job design, training, employee involvement, alternative forms of employee representation and voice, compensation, work-time arrangements, non-standard employment, diversity management and workplace wellbeing programs. The paper begins by discussing the practical and policy importance of such internal labour market adjustments by linking them to a number of related issues of practical and policy importance. It then outlines the main current and forthcoming factors that are giving rise to adjustment pressures in both external and internal labour markets. The implications for adjustment issues in external labour markets are then discussed, focussing on those issues that have the most important implications for internal labour market adjustments. The implications for internal labour market adjustments in various workplace and human resource practices of firms are then outlined, relating them to the various adjustment pressures as well as the adjustments that are occurring in the external labour markets. Particular attention is paid to the extent to which the external and internal labour market adjustments are substitutes and/or complements (i.e., the extent to which they impede or facilitate each other). Policy implications are then discussed, focusing on the barriers that inhibit internal labour market adjustments including barriers to innovations in this area. As well, the paper analyses the extent to which internal workplace and human resource practices are affected by various policy initiatives, and the extent to which the policy initiatives themselves can be affected by the internal labour market responses of firms. The paper deals with the issue of whether there is an appropriate role for public policy in this area, or whether internal labour market issues are simply 'the business of business' with governments having no business in those internal labour markets. An overall message of the paper is that more attention needs to be paid to the inter-relationship between the adjustment process of the external labour market and internal labour markets of firms with their workplace and human resource practices. Effective policy making in the labour adjustment realm requires information on all dimensions of this inter-relationship: theoretical knowledge of the underlying causal relationships; empirical evidence on those relationships and how the various actors respond; and appropriate policy responses based on such information.