government runs the risk of having to finance pensions, accidents insurance and health care for a growing uninsured population.

# 5.4 Other challenges

The analysis behind Figure 1 assumes that workers evaluate employment options, and take jobs that offset their opportunity cost of time. If the opportunity cost of an individual's time is equal to the social cost, the choice made by individual workers is the best choice from the point of view of social welfare. But, there are at least two cases where this assumption may not be appropriate; "unsafe" jobs and child labor. In both these cases, workers' benefit from taking the job falls below the actual salary they receive, and therefore, the employment choice is welfare reducing. This is why it is considered appropriate labor policy to intervene in efforts to promote safety, and in efforts to eradicate child labor. The main question that each country must deal with is: How to intervene? and, What policy instruments to use?

_Safety on the job_ Addressing the diverse types of safety and health hazards that result from a wide range of industrial activities goes beyond the realm of an organization such as the Ministry of Manpower alone. In Indonesia, there are four clearly identified groups motivated to act in this area; employers, workers, Astek, and the Ministry of Manpower. Employers are interested in avoiding interruptions in their operations and minimizing production costs. If unsafe practices lead to costly operations or delays, they will pursue safer methods. Workers are interested in preserving their health and safety to the best of their ability. Therefore, information that persuades them that a safer practice will free them from risks will encourage the adoption of safer practices by them. Astek manages reimbursements for expenses associated with accidents involving workers covered by insurance. The Ministry of Manpower is in charge of monitoring the enforcement of safety standards established by law, as well as encouraging safe practices through enterprise committees. There is room for improvement in terms of encouraging safer methods.

Astek has a monopoly on mandated workers' insurance programs. Monopoly power reduces Astek's incentives to develop a "fair" insurance system. In other words, it is possible that the contributions from the insured companies are unrelated to the costs of reimbursements to the injured workers or their families. Attention to links between contributions and benefits (incomes and expenditures) would come naturally to a competitive market for insurance, and that would help encourage sector-specific and company-specific safe practices. In the case of the Ministry of Manpower's role, more attention to impact will improve policy making. A shortcoming of the current role of the Ministry of Manpower in the safety area, is that its work and collected information in terms of compliance does not feed any data base, and does not seem to be used to conduct research linking safety practices and the incidence of accidents. In order to direct attention towards impact, the Ministry must keep records on accidents, and examine the impact of safety monitoring on the incidence of accidents.

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