Its not just startups. The chickens always come home to roost.
Lets go into COVID since it is a wonderful example. Employers in Ecuador dealt with minimum wage protections well outpacing productivity growth precovid, doubling the cost of protections relative to Colombia and 75 percent higher than in Peru [1] . Then COVID hit. The central government had no choice but to temporarily rescind the rules of strict protections under "force majeure". This eliminated all severance payments to employees under 'force majeure'. [2]
What happened?
A bunch of low performers who had built a decade or more in 1 job, got unexpectedly laid off, despite working in perfectly operating businesses with no risk of bankruptcy (AG, export adjacent etc) Then, with zero marketable skills from a decade of non-work, these workers are chronically unemployable now. [3]
PS - Regarding the UK number cited, which some people felt very strongly about.. I made a mistake and quoted the wrong year. I can't edit my comment any longer [4]
[1] https://www.elibrary.imf.org/downloadpdf/journals/002/2021/2... see page 11, section 1.
[2] https://www.loc.gov/item/global-legal-monitor/2020-09-21/ecu...
[3] https://www.elibrary.imf.org/downloadpdf/journals/002/2021/2... , see page 13, section 6 ("the recovery has been very partially among the less educated (persons with basic education or less) ....'they exited' the labor force in larger numbers from the crisis onset")
[4] The number is available in https://en.wikipedia.org/wiki/List_of_countries_by_share_of_...
I'm not surprised, on a startup-angled site, that there'd be dissatisfaction with not being able to hire and fire at will. COVID had employees re-assess what was important for them. Tangentially, now we're seeing that shorter working weeks results in higher employee productivity and satisfaction.[1]
Having job security, when you've taken on long-term commitments like a mortgage and raising kids, is considered important in many parts of the world. The EU isn't SV; for employees that's probably a good thing.
[1]: https://www.weforum.org/stories/2023/10/surprising-benefits-...