The Netherlands should reduce incentives which encourage companies to use flexible or temporary contracts, the European Commission said in new recommendations on beefing up the Dutch economy.

The share of flexible employment (both workers on temporary contracts and the self-employed) in the labour market remains high and this is “particularly distortive effects at the margins of the labour market” and can “amplify inequality in opportunities and impact productivity,” the commission said on Wednesday.

While a certain degree of flexibility in the labour market can help make the economy itself more flexible and meet workers’ own preferences, there can also be a negative effect on both workers and the wider economy, the commission said.

“For example, participation in training and lifelong learning is a challenge for those with flexible contract employment arrangements,” the commission said. “This in turn reduces investment in skills and weakens productivity.” It is also cheaper for employers to hire staff on flexible or freelance contracts.

In the Netherlands, the logistics, agriculture and meat processing industries in particular rely on large numbers of people on short contracts, often brought in from abroad.

The government has announced measures to address the differences between permanent and flexible work contracts, including abolishing zero-hours and on-call contracts, although the legislation has not yet been finalised. It is currently with the Council of State, which assesses all draft legislation, for its opinion.

According to national statistics agency CBS, the Dutch workforce includes 2.7 million people who have a flexible contract and 1.2 million people who work as freelancers.