The EU executive's new monthly survey, the first of which was published on Tuesday, February 17, indicates that joblessness is becoming an increasingly serious problem for the 27-member bloc.

"Announced job losses now far outweigh those relating to job creation," the report said, adding that "further deterioration is foreseen…with overall employment contracting by 1.6 percent, or some 3.5 million jobs."

The report said that average unemployment in the EU, estimated at 7 percent in 2008, would rise by 10 percent in 2009.

The metalworking, automotive, financial and logistics industries were expected to be among the hardest-hit sectors, with the retail sector being one of the few positive areas.

And the report also said that unemployment would likely continue to rise in 2010. Previous economic forecasts had predicted that the bloc's economy would begin to recover slightly that year after staying in recession in 2009.

But the EU now thinks that around a half a million jobs will be lost across the bloc in 2010.

The study said job markets would shrink in all big European economies with Ireland, Spain and the Baltic nations the worst-hit.

The Comission expects Germany to lose around 500,000 jobs this year as Europe's largest economy struggles with its worst economic recession in decades.

Competition over competitiveness

Rising unemployment threatens not only to worsen the global economic slowdown, but to pit individual EU member states against one another as national governments try to save jobs for their own constituencies.

For example, there has been a testy exchange between representatives of Limerick and Lodz, after the computer company Dell decided to move its European manufacturing headquarters from Ireland to Poland. An estimated 1,900 of 3,000 jobs will be lost at Dell's Limerick plant, as the company attempts to take advantage of lower wage costs in Eastern Europe.

"I am very, very bitter about this," Limerick mayor John Gilligan told Reuters news agency, adding that Lodz's gains could be short-lived since a rise in Polish prosperity and wages might lead the company to pack their bags again.

"We are aware that Dell moved here from somewhere else, and they could leave Lodz one day, just as they have left Limerick," Marek Cieslak -- president of the board of Lodz special economic zone which offers tax incentives to foreign investors -- said in an interview with Reuters.

Legal battles

The European Commission is currently investigating 52.7 million euros ($68 million) in aid provided by Poland to Dell. And that is by no means the only case that has pitted EU member states against one another in the race to save jobs.

France has drawn heavy criticism from fellow EU members for making its recent state aid package to the French automotive industry contingent on the companies agreeing not to move French jobs elsewhere in the bloc.

That has led a variety of countries including Germany and Belgium to accuse France of protectionism.

To try to address the problem, the EU has called an unofficial summit in Brussels on March 1.