The Netherlands needs to take ‘drastic steps’ to reform the labour market if the country wants to maintain its current high level of prosperity, according to a special committee set up by the government to research the issue.

The current rules are causing unnecessary social and economic problems, committee chairman Hans Borstlap, a former senior civil servant, said. He is particularly concerned about the rise in self-employment which, he says, is driving insecurity and hurting innovation.

The report’s conclusions are based on an analysis of national and international research as well as interviews with employers, unions, workers and other experts.

Workers are becoming more insecure about their jobs, and are failing to invest in boosting their skills and in their future, the report said. At the same time, employers are bringing in too many people on flexible contracts and failing to invest in them because they are only with the company short term.

‘We have spoken to young people who are more likely to have flexible jobs,’ Borstlap said. ‘They are afraid to buy a house or have a family. We need to pause for reflection. Something is wrong.’

Employers increasingly regard taking on staff on permanent contracts purely as a cost, he said. But this is both morally wrong and damaging both prosperity and social cohesion.

‘The proportion of freelancers and workers on flexible contracts is far higher here than in other countries,’ Borstlap told news website Nu.nl in an interview. And it is the rest of society which is picking up the bill if freelancers have no insurance and don’t build up a pension.

‘That beer in a beach pavilion in Scheveningen is far too cheap,’ he told Nu.nl. ‘Because we are all paying for the worker who is too sick to do their job. Those costs are usually included in the product.’

The committee recommends the workforce itself should be divided into three sorts of employee – self-employed, workers with a traditional contract, and short-term staffing agency employees – and that everyone in work should have the same basic rights and obligations.

The main recommendations:

• Companies will have to prove that the self-employed workers they use really are self-employed, reversing the burden of proof
• Staffing agency workers should only be able to work for 26 weeks for the same firm, and the work they do must be temporary to cover peak periods or an unexpected rush
• Employers should be able to adapt jobs, location and working hours in line with the demands of the economy
• Employers should also be able to apply for ‘partial redundancy’ if necessary
• Everyone in work should pay the same taxes
• Everyone should have a personal training fund
• Employers should pay towards extra training for all workers, regardless of status and compensation for redundancy should be paid into this fund
• The tax allowance for freelancers should be gradually scrapped. (This is already happening.)
• Temporary contracts should cover no more than two years – the current limit is three
• People on flexible contracts should have a higher minimum wage
• People employed via staffing agencies should have the same secondary benefits as people in regular jobs at the same firm
• Internet-based employment platforms (such as meal delivery services and bar staff apps) should be treated as employers and responsible for taxes and premiums – ending the freelance status of the gig economy
• Sick pay should be cut from two to one year
• There should be a public basic insurance policy against invalidity for everyone which would kick in after one year. Employees would keep their current provisions