In Germany, for example, after the dramatic contraction in demand as a result of the 2008 crisis, firms did not get rid of workers. Unions accepted wage reductions or shorter working hours and that prevented a worse decline. Thus, despite apparent rigidities, the labour market responded in a very flexible way.
Also, countries can be wealthy and stable without all having to implement the same policies. The United States and Sweden are two good examples: labour markets are very different there, but people in these countries still have a good standard of living. Standard: What you’re saying sounds good in theory.