The rough idea is that countries that hobble companies' ability to compete will have more trouble generating competitive companies. Obviously this can be taken to extremes (allowing companies to buy children as slaves, for example), but if you err too much on the side of protecting the laborer then you can run into other kinds of consequences.
There's many ways that governments protect their local industries. For instance, the US saved its semiconductor industry (Intel, etc) from doom at the hands of the Japanese, by aggressive tariffs and other trade policies. (Intel cofounder Andy Grove mentioned this in the context of worker's rights. [1]) And that's not mentioning all the subsidies that went into building the US high-tech industry [2], as well as US industry in general [3].
That said, I certainly don't think Apple developers are badly off compared to Apple janitors, or Bay Area fastfood workers. And it's not like countries like Japan and Germany are slouches.
And it's possible that the article on Apple under discussion is false, as some commenters claim.
The implicit suggestion that this is because of privacy laws is silliness. There are plenty of industries in which Germany is ascendent (automotive, biotech, chemicals) which have no more lax information security requirements than computing. I mean, wouldn't you call bullshit if I said, "Maybe if the US had stronger privacy laws Europe wouldn't be dominant in the chemicals industry..."
Have you ever read William Langewiesche's book on nuclear proliferation, _The Atomic Bazaar_? The fact that Europe has a need for workplace security does't mean that Europe actually has workplace security: Langewiesche alleges that lax security and deference to workers essentially allowed URENCO (the UK, Germany, and [mostly] Netherlands) to arm the A.Q. Khan network in Pakistan.
