If this perspective of "startup failure is a deep moral sin insufficiently penalized by the government" is common in Europe then the lack of entrepreneurship is not very surprising.
Notably, Sweden has a very robust social security network and a lot of entrepreneurship as well, the Swedes I talked to explicitly pointed to it as something that eased their way into taking risks.
There are specific issues with the worker models of Uber et al, but that's an orthogonal point to the general formation of startups.
I think the issue is with the 95% of startups that have no or moderate success who convince employees that lotto ticket equity and beanbag chairs are worth more than work-life balance, healthcare, and cold hard cash.
This statement perfectly encapsulates the difference in work culture from the US and Europe. Exploitation doesn't happen because successes exist. You can get rich, so everything is allowed.
Having less social nets and having more startups aren't independent: they both result from an inherently risk taker culture.
(of course, all generalizations are limited and may not apply to all cases)
It's an accident that the most important bits of corporate and labor law don't distinguish between a 300-person shoe factory and a 20-person series-A startup. They weren't around when these concepts were codified and written in stone. The systemic and personal consequences are unfortunate but impossible to prevent.
Another quick example from Portugal: Did you know businesses or business-like entities (we have those for smaller entrepreneurs) are required to keep a 10-year archive of paper receipts, regardless of having already filed digital copies with the government or of any other common-sense exception? Most people here don't. But they can get serious fines for not being able to produce almost decade-old records they had no clue were mandatory.
The points are: a) that there is no such thing as "europe" to begin with in a regulatory sense; b) but there are structural reasons why entrepreneurs in the area behave like they do, it's not an accident; c) only the paranoid survive, so do your research because there will be a test later and you don't get a do-over.