If you lay off 10% because times are worse and there is less work, then interestingly you are more or less required to re-hire the same people when you hire again (typically that would be negotiated so you’d buy them out instead).
The 10% you fire also has to be the 10% last hired, you can’t fire the 10% worst performing (again, this can be negotiated so firing an older underperforming hire quickly becomes very expensive - think 1-2 years salary or similar)
Is this perfect? No. But it makes employers think hard about hiring for better or worse, and it means you plan far ahead to ensure you have enough work in bad times, and don’t go on a hiring spree in good times.
It's important to note that these countries (Sweden, Japan) with higher employee protections and guarantees are very different in terms of culture from the hyper-individualistic US.
https://en.wikipedia.org/wiki/Law_of_Jante <- basically an invese of the American culture
That's what you get when you have a high qualified and restricted (in numbers) workforce. But let's see if it keeps being that way or it goes the way of France and Italy
(So how's that idealistic view working out in their real estate market again?)
Again, it's a job, not a marriage. Some stability and regulation is welcome, sure, but jobs for life don't exist anymore.
Why would someone ever hire if they wouldn't be able to terminate the contract if it's ever needed? And this goes both ways, I do want to be able to quit (with a "short" notice)
Other answers gave plenty of good reasons: employees underperform, projects change, companies close, etc
It's a job, not a marriage, and even those are becoming shorter.
Note I'm not proposing "at-will" employment, I don't think that is good as well (even if employers like it, I don't think it's good for overall labour relations)