It's a good question. Here, if you have a permanent contract, the employer is required to pay into various government insurances, and this is mandatory for all employers. The salaries here are lower because of this, but it's deceiving because the insurances are based on your salary. Your employer also pays anywhere between 2-10% on top of your monthly salary into a pension fund on top of your state pension. So in short, if you make 100k EUR, after taxes that's actually your money. So in my case, after I've made my monthly mortgage payment, set some aside for groceries and some subscriptions, the money I have left can be spent on whatever I want without worry, I practically don't need to save unless I choose to.

You're right in that employers restrict hiring as much as possible, what tends to happen here is you get a 1 year contract with the option to be taken on permanently, and these contracts don't have all of the insurances. Taking a permanent contract here is seen as a serious commitment to the company, so most people who just want more money in their bank account at the end of the month choose not to take permanent contracts and take the risk themselves.

If I saved for these things myself in the US, I would've been netting less than I do here in Europe, despite my US salary being 100k higher. A lot of people live way beyond their means with all these things considered.