Regulation intended to protect workers often has what effect on firms?

• A. They always reduce costs and increase profits.
• B. They have no effect on operational costs.
• C. They can raise costs and compliance burdens but may improve safety, fairness, and long-term productivity through skilled labor and stable markets.
• D. They automatically improve competitiveness without any burden.

Answer: (C)

Regulation aimed at worker protection creates a trade-off for firms: it often raises costs and adds compliance tasks, as money goes into safety training, equipment, inspections, and record-keeping. At the same time, these rules can make workplaces safer and fairer, which helps with employee morale, reduces injuries, and attracts skilled labor. In the long run, fewer accidents mean less downtime and lower injury-related costs, supporting steadier production and potentially higher productivity, which can improve a firm’s competitiveness. So the best answer recognizes both the upfront costs and the potential long-term gains in safety, fairness, and productivity through a more stable, skilled workforce.