The same happens in the Netherlands. However, that doesn't mean that it's legal. It's just that it's so convenient for both parties and IT contractors are so well paid that nobody challenges it.
I assume this is the same in most countries. IT contracting in it's current form is only viable because it's well paid and IT workers are rarely organised.
I work as a contractor in The Netherlands and currently wouldn't want it any other way. The payment is indeed good and there's plenty of work available for the (at least somewhat) capable developer, so in fact this puts the developer in a very powerful position.
Also, it seems we still have a shortage of qualified IT personnel in the coming decade(s), so there's little reason to stop doing contract work and become a permanent employee.
Regarding the removal of that article: it's not "vested interests" flagging that necessarily. Many users (including me) may have either found it offensive or overly political, and flagged it because it consisted of inflammatory political ranting where the political talking points distracted too much from any substance that article might have had.
Have you actually read the article? None of that applied. It was extremely factual and well constructed with a mildly left of center bias. Nothing compared to the extreme libertarian bias of half the non-technical articles on HN.
This is just a knee jerk reaction to the word "socialist".
There was nothing offensive of inflammatory about the article unless you consider the very existence of progressive though offensive.
I assume this is the same in most countries. IT contracting in it's current form is only viable because it's well paid and IT workers are rarely organised.
(And there's a major vested interest in keeping it this way, hence the rapid removal of this excellent article from the frontpage of HN yesterday: http://socialistworker.org/2015/06/24/class-capitalism-and-t... )