Millions of new jobs and lower unemployment expected as national reforms begin to take effect, but young people are still losing out.
The Commission's latest employment report paints an encouraging picture, forecasting 5m new jobs in the EU by 2009, on top of the 6.5m created in the last two years. Unemployment is expected to fall to under 7% this year, bringing the number of jobless down to its lowest level since the mid-1980s.
"Recent labour market reforms are beginning to show an impact" said jobs commissioner Vladimír Špidla. "Structural unemployment has fallen by one third since 2004 and the EU employment rate, currently at 66% has moved much closer to the overall target of 70%."
Half of EU countries (as compared with just a few in 2006) are now actively working to achieve greater flexibility in the labour market combined with greater job security. The "flexicurity" approach aims to make labour markets more responsive to globalisation, reduce structural unemployment and ease the transition to a more open labour market.
Although more women and older people are in work, problems remain, with youth unemployment averaging 17.4%. This is a persistent concern for many EU countries, as young people are still more than twice as likely to be unemployed as the average for the workforce as a whole.
Part of the problem is that nearly one in six young people drop out of school early. The EU is looking to reduce this number, recommending increased investment in education and training to boost attainment levels.
Another progress report - on welfare and social inclusion - is due on 25 February.