It's good because it's less risky to hire people. In Spain it's hard to fire people and the youth unemployment rate there was more than 50% last time I checked.

edit: And the ethical answer is because employers and employees should have the freedom to voluntarily agree on the terms of employment.

I have a different view of ethics. To me it seems more ethical to give people the freedom to voluntarily agree on the terms of employment within certain limits.

The reason for this is two fold: first, some people need protecting and second, the employment contract is frequently an unequal power relationship.

Also, I'm not sure it's good to pick an economy in poor shape and presume it can be reduced to a single reason. Germany has laws to protect workers, for example, but no one says they're in trouble.

I guess what I'm saying is that making it too hard to fire workers is one thing that can drive unemployment up, but only one of many, and it should be balanced by the need to care for others. Some middle position seems best.

The flip part is that it doesn't mean people end up on the street because there are insurance against being unemployed.