The Lisbon Process in the European Union: Lessons for Croatia Iceland, Australia and New Zealand. This means that there is an inverse relationship between the availability of income other than salary and the tendency to lengthen working time. Like income transfers, the level of income taxes also influences the reduction of working time. EU member states, in comparison to the US, have a relatively high level of taxes imposed on labour. The correlation coefficient,-0.55, between the level of taxes imposed on labour and the average working time also confirms a negative relationship between taxes and average working time. Institutional conditions influence not only average working time in the EU, but also employment. In Figure 2 we show the relation between the levels of product market regulation and the degree of protection of the labour markets on the one side, and employment rates on the other. The data show that the higher the level of employment protection and the more severe the product market regulation, the lower the employment rates in the economy. EU member states with the highest levels of product market regulation and the highest employment protection rates, such as Italy, Greece, Belgium, Spain and France, have at the same time the lowest employment rates. And vice versa, countries with lower product market regulation levels such as Great Britain, the US or Denmark, have the highest employment rates. Figure 2. Employment rate vs. regulation of product markets and labour pro­tection 80% Employment rate 80% Employment rate 70% 70% Employment rate Employment rate 60% 60% 50% 0,3 Regulation of products markets 50% 2,3 0 2 4 Labour protection Source: Author's calculation using: Nicoletti, Scarpetta and Boylaud, 2000; Eurostat, 2004 This is reflected in a substantial positive relationship between the level of product market regulation and employment protection and unemployment. A similar analysis prepared using the same data for regulation and rates of unemployment shows that the level of unemployment in the analysed EU 79