Amsterdam officials are investigating if they can legally exclude companies that discriminate against workers from council contracts and will press ahead with using ‘mystery guests’ to check, the Financieele Dagblad reported on Friday.

The move, which is part of a plan which will be sent to the councillors this week, is meant to promote diversity and tackle discrimination in the jobs market which, social affairs alderman Rutger Groot Wassink told the FD is ‘rife and hard to eradicate’.

Young people with an ethnic minority background are 40% less likely to be invited for an interview, Groot Wassink said, citing recent research by the universities of Amsterdam and Utrecht. Measures to fight discrimination against women, the disabled and older people are also part of the proposed policy.

Groot Wassink will earmark €750,000 this year and the next for an integral approach to the council’s role as standard setter, employer and shareholder. He said he means to use the controversial method announced earlier this year of employing mystery guests to find out whether or not companies are guilty of discrimination.

‘I am not averse to naming and shaming but to my surprise this is a contentious issue. We don’t want to give companies a bad name but if they continue to discriminate despite warnings the contract should be terminated,’ he told the paper.

Mystery guests will also be used to gauge discrimination against trainees, one of the main pillars of the plan as traineeships are often the first introduction to the jobs market.

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Incidents of discrimination on the basis of skin colour, name or religion will be filmed and an ‘attention grabbing’ video will be sent to the media, the alderman said. Other methods include fictitious application letters and the promotion of inclusive recruiting.

Companies (part) owned by the city, such as Schiphol, the port authority and public transport, are also coming under scrutiny as will council staff itself. ‘It is not clear from the composition of our staff that Amsterdam is a hyper diverse city, the alderman told the FD. ‘We are making strides where the number of women is concerned but we still see too few people with a migration background.’

Groot Wassink says there are legal grounds for excluding companies from winning council contracts and is having lawyers work on the case. ‘We must makes sure it is legally sound,’ he said.

Amsterdam city council buys in services from third parties worth €2m each year.