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That's what they tell us anyway. What actually breeds innovation is giving people the opportunity to explore their own talents and pursue their interests from a place of stability. Things that interfere with that include tying healthcare to employment, allowing receiving healthcare to bury someone in debt, tying public education to local income levels, allowing pursuing higher education to bury someone in debt, inadequate public mental health services, allowing the minimum income for a full time employee to be below the amount required to meet basic needs for the average family, allowing work time for a full time employee to exceed a reasonable limit that would allow the employee to spend time with children, take care of their own health, and pursue hobbies and other interests.
If that was the case then there would be European companies who innovate. I can think of very few in comparison to American companies, especially in tech and medicine. (BioNTech and Spotify come to mind, struggling to think of others)
Otherwise, what you've listed as things that interfere with innovation, I see more as evidence of things like modern indentured servitude and income driven inequality. All of those things are huge problems for our society and many of those things are lesser problems in a lot of European countries, but the rich people are still innovating here regardless.