| Summary: | Personal costs and labor market flexibility are the basic determinants of production and location of foreign investments. Therefore the question of industrial relations and social systems wins the attention of this master thesis. Differences in welfare situation of Europeans are growing. The growth of labor productivity exceeds the growth of real wages. Consequently unit labor costs are falling. The share of wages in the total income is decreasing, but the unemployment is rising. The question of real functioning of tradeoff between wages and unemployment emerges. However there are countries, for exampleDenmark, where social situation has improved and efficiency has risen. This master thesis analyses four European social models, their functioning and outcomes. The thesis highlights models' merits and points out on the shortcomings. The biggest attention is paid to the Danish social model, which successfully represents both the efficiency and equality. The thesis searches whether the Danish flexicurity is the most optimal solution and whether the model is directly applicable in other European countries. At the same time the thesis gives recommendations how to improve the models and tries to find out the possible development.
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