Labour market regulations are seen by many as detrimental to job creation, growth and innovation. It is argued that employment protection legislation in developing countries tends to reduce the creation of formal sector salaried jobs, encourage the growth of the informal sector, and thus slow investment and growth. Therefore, reform of labour market institutions is needed to increase labour market flexibility to provide incentives for job creation. Pressure to make labour markets more flexible has been reinforced by the transfer of production and jobs to emerging economies, especially in Asia.