[davidw]

Well; yes and no. If it's really difficult to fire people, like it is in many places in Europe, hiring is also less likely to happen. People tend to cling to jobs once they have attained 'unfireable' status.

An alternative solution: make firing people easy, but provide some support to those who get fired. That has costs and benefits too, and is a discussion probably best left to another site. Its main benefit is that it moves the provisioning of "social assistance" from companies, who are no longer forced to hold on to unproductive/unneeded workers, to the government.