How to better play the role of the government to maintain the stability and harmony of the labor market and labor relations is of great significance to social and economic development. Based on the viewpoint of institutional economics, this study analyzes the government's regulations of fairness and efficiency in labor market and labor relations. This study posits that government regulation is the guarantee for the free and efficient operation of the labor market; labor market failure is the prerequisite for the existence of enterprises and labor relations; and government regulations can improve the efficiency of labor market and labor relations, and in turn solve its fairness problems existed. To further improve the efficiency of government regulations, this study proposes to eliminate market segmentation by establishing a unified labor market; to promote the mechanism of wage formation by improving the collective negotiation system; and to establish labor laws and policies adapting to China's flexible employment.