This paper deals with the analysis of the functioning of the labour market in Serbia. The overall situation in the Serbian labour market is deteriorating. However, if the two sub-periods are observed, before and after the recent economic crisis, it can be noticed that some improvements occurred immediately before the crisis. The first improvement that came about was the unemployment decline, and after that the level of employment increased. This in particular affected women, which further led to the narrowing of the employment gender gap. Unfortunately, these improvements were only shortlived. During the post crisis period the situation aggravated, as manifested by a convergence between the employment and unemployment rates of women, whereas the economic activity of women dropped to only half of the female workforce. Similar patterns are also characteristic of both young and older workers. The rates of employment of these two subsamples of the workforce have been at the lowest levels achieved in the last couple of years in Serbia. The increasing levels of unemployment disturb the sectoral distribution of employment. This, jointly with the skill and occupational mismatches, contributes to the further deepening of the structural unemployment. All of these indicate an increasing malfunctioning of the Serbian labour market.