Earlier quoted context omitted.
>simply won't hire them in the first place Except that is simply not true, and very easily proven false simply by showing countries with actual employee protection and unions like e.g. Denmark.
It is not black and white though, I'm in sweden. Companies will of course hire out of necessity, but strive as much as possible to not do it - outsource, consultants, temp workers, move abroad etc etc
On the opposite end of the spectrum, in Norway not only is it harder to fire someone, but terminating an employment contract is normally with 3 months mutual notice. So you risk bad hires, but you also don't risk essential staff members disappearing overnight very often, as serving out the 3 months notice is normal and expected. That makes companies with small teams less vulnerable in that respect.
Overall I don't really know if it makes much difference to employers. I hasn't seemed like that for me. But it makes a big difference for employees.