This paper presents the structural transformation of the Zambian labour market, characterized by a shift from permanent, pensionable employment to precarious labour arrangements. Drawing on a political economy and institutional perspective, the paper analyses how Zambia’s privatization agenda of the 1990s and early 2000s dismantled the regime of state-controlled industrial paternalism that had previously guaranteed workers’ rights, and ushered in the current neoliberal labour order in which employment relations are increasingly governed by market forces rather than strong state protections or collective social arrangements. The paper argues that although institutional and legal reforms, such as the enactment of the Employment Code Act of 2019, have attempted to mitigate the adverse consequences of this transformation, the proliferation of labour outsourcing and subcontracting has significantly eroded both the state’s capacity to effectively protect workers and the bargaining power of trade unions, while simultaneously suppressing better terms and conditions of employment. The paper concludes that the institutional framework remains caught between the need to attract foreign direct investment and the imperative to protect workers’ rights within a transformed economic landscape.