The 2009 'Employment in Europe' report - released by the Commission earlier this week - paints a gloomy picture, with best-case projections predicting the loss of more than seven million jobs over 2009-10, and EU unemployment levels exceeding 10% sometime next year.
The gains made in EU employment growth earlier this decade have largely been reversed by the current economic crisis, meaning that the employment targets set by the EU's Lisbon Strategy for growth and jobs will not be met.
The Baltic countries, Ireland and Spain are the EU member states hardest hit, with unemployment rates doubling or worse since the crisis began.
The EU remains notably weak in the area of long-term unemployment, which, despite having declined since the 1990s, remains a serious problem. In recent years, close to 45% of all unemployment spells lasted longer than a year in the EU, compared with only about 10% in the US.
'Historically high' youth unemployment
Among the unemployed, young Europeans figure most prominently. "Unemployment among young people has reached new historical highs over recent months," says the report.
Furthermore, workers with fixed-term or temporary contracts have been hardest hit by the employment contraction.
However, the report contends that the underlying strength of EU labour markets, namely "fundamental structural improvements" since the mid-1990s, has increased worker dynamism and kept the EU from experiencing massive unemployment.
These improvements – primarily "flexible" labour market innovations such as shorter working hours, temporary workplace closure and short-term contracts – have cushioned Europe's fall in a time of crisis, it is argued.
Indeed, the report states that such attitudes must be maintained, concluding that "strict employment protection legislation tends to raise long-term unemployment, while spending on labour market policies tends to reduce it".
Going green the solution, claims Commission
When the global economy eventually picks up, the EU's goal of a low-carbon economy will be the key driver in creating new jobs, potentially revolutionising EU labour markets, EU Employment Commissioner Vladimír Špidla has argued.
The report envisages a future of dynamic labour markets with "new green jobs, greening of existing jobs, and the loss of some existing jobs".
However, the creation of this "green-collar" workforce will depend on significant increases to the skills base of EU workers.
The 'Employment in Europe' report forms the analytical basis for the Joint Employment Report (JER), for which the Commission will present its proposal on 9 December.