Stoner you're posing a very interesting question. Technically it's not illegal to make people redundant in Germany IF the works council (i.e. the union) agrees to it. BUT if you do go down this route, typically what happens is that the firm keeps on all employees on FT contracts and pay, until they have found a new role outside of the business. The company also has to pay for outplacement support to help with that transition.
The reality of this situation is that the level of commitment between the emplopyer and the employee, is much higher in Germany than it is here in the UK and the US. Germany is what is known as an 'alliance' economy whereas we confirm to the so called 'anglo-saxon' model (which we largely defined).
There is a reason why the Germans (and the Japanese) build such good cars and why we and the US largely stink, and that's because the commitment in VW/BMW/Porsche etc means that they have retained a lot of the skills in manufacturing over the years. Making cars well needs process refinement i.e. the ability to run a manufacturing process really well. That means accumulating knowledge and refining the process. Other factors in Germany also support this idea, e.g. the way that these companies are largely financed by banks (who tend to have a seat on the board) and regional/state investment, the role of the unions as collaborative not adversarial and the education system, which works with the unions to produce the skills that industry needs.
In the UK and US, our lack of commitment means a highly fluid job market, which means lots of people moving around, which means a much higher degree of creativity - radical innovation is our key skill, hence why we tend to be better at inventing things rather than refining them, think drug companies (almost all of which are either British or US in origin).
The key message is that there are different forms of capitalism and firms tend to behave according to what the environment and background factors favour. There is no right or wrong, just differences in competitive advantage.