ABSTRACT:Technical change, economic internationalisation and generally increased competition have caused management in many firms to adopt new employee management systems such as “lean production”, TQM, and have placed a premium on “high performance” cooperative industrial relations systems. This article seeks to provide a first analysis of their likely effects upon the structure of employment, and whether they exacerbate the unemployment problems of many categories of workers. It is argued that these systems place a premium on employment stability of those workers for whom functional flexibility and high levels of cooperation are needed. It asks whether a mix of job stability and limited functional flexibility among incubent workers in many Western European countries has contributed to low hiring rates, and how far cooperative relations within the firm can be cultivated in isolation from conditions in othe