For instance, when every employer (including those that may be only marginally successful to begin with) is expected as a matter of law to extend onerous labor protections against firing and laying off to each and every worker,[0] this results in marginal workers (who may have been socially marginalized originally for reasons of ethnic heritage and the like) being completely excluded from the market, which makes their plight even worse. (Except for forms of "gig work" or informal employment, of course - which in practice function to sidestep the most onerous regulations to some extent.) A very relevant issue in present-day France.
[0] And to fund those costly welfare programs through payroll contributions that are levied on employees and employers alike - which is its own issue and often amounts to exploitive, confiscatory taxation for the most marginal workers.