Financial regulation of social innovations as a tool for ensuring social security

Andreeva Ol'ga Valentinovna ORCID: 0000-0002-5567-6396 PhD in Economics Associate Professor of the Department of Finance, Rostov State University of Economics 344002, Russia, Rostov region, Rostov-On-Don, B. Sadovaya str., 69 olvandr@ya.ru Other publications by this author

Introduction.

Social innovations are able to solve social problems that are not amenable to traditional approaches. In this regard, the primary interest is, in our opinion, the study of "bottlenecks" in achieving social security in order to identify the subject field of social innovations and search for effective methods of their implementation, including through financial regulation.

The concept of "social security" in the Russian scientific literature appeared thanks to scientists of the Institute of Socio-Political Studies (ISPI) RAS in the mid-1990s and aroused keen interest from the scientific community. Operationalization of this concept took place due to the introduction of such concepts as socio-economic security, social security system, threats to social security, social security model, etc. Currently, there is a separation of relatively independent areas of social security research, for example, security in the field of health, life of socially vulnerable and unprotected citizens, including children, demographic security, etc. Various aspects (sociological, philosophical, political, legal) of social security are considered, which provides a pronounced interdisciplinary approach to the study of this category. At the same time, it should be noted that representatives of economic specialties practically do not use the term "social security", as a rule, the subject of their interest becomes "socio-economic security" or "economic security", within which a block of social indicators of its assessment is allocated. Thus, in economic sciences, social security is considered as a particular subspecies of economic security. We can agree with this approach with a certain degree of conditionality, since, indeed, social processes are quite difficult to separate from economic ones, but in a social state, which, according to the Constitution, is the Russian Federation, it is the provision of social security that should be the leitmotif of ongoing reforms and transformations, and its indicators should clearly fit into the context of state policy for achieving effective social impact. Of course, "the financial aspect is important, since any measures in this direction require a sufficient level of funding, while it is important to find the optimal combination of both state participation and the role of business and citizens themselves in this process" ^{[1, p. 293]}.

So, despite the fact that "research in the field of social security is successfully developing, many questions remain unclear" ^{[2, p. 102]}. First of all, this concerns the very concept of "social security", its evaluation indicators, as well as approaches to achieve it, including through the introduction of social innovations and their financial regulation.

The purpose of the article is to formulate an approach to the formation of an effective system of financial regulation of social innovations in order to ensure the social security of the state. Research objectives: to study approaches to the concept and content of the concept of "social security", to calculate social security indicators, to propose conceptual elements and approaches for the formation of an effective system of financial regulation of social innovations, based on the requirements of achieving social security.

The research methodology is based on the developments of Russian and foreign scientists in the field of social security, social innovation, financial regulation. Methods of generalization, analogy, statistical data analysis, tabular and graphical methods of information interpretation were used.

Research results and their discussion

"The term "social security" itself is a literal translation of the English-language expression "social security", used to denote the model of social protection of an individual in the state. This concept was first reflected in the framework of legislative innovations of the period of the "New Deal" policy of F. Roosevelt in 1935, and later, in the 1940s, it was approved in the documents of the International Labor Organization (ILO). In the Universal Declaration of Human Rights of 1948, the term in question is used in Article 22. After that, it was enshrined in European documents regulating social standards, including the International Covenant on Economic, Social and Cultural Rights of 1966, ILO Convention No. 102 on Minimum Standards of Social Security of 1952, the European Code of Social Security security in 1990" ^{[3, pp. 62-63]}. However, in these documents, the concept of "social security" is already used as "social security" and generally reflects the policy of a number of foreign countries, in which the solution of problems related to ensuring social security mainly occurs through the provision of support measures in material or other form to certain categories of the population in need of them. In our opinion, this approach significantly narrows the content of this term, leads to its different interpretation and does not correspond to the concept of comprehensive social security of society.

In Russian science, the existing points of view on the concept and essence of social security have various methodological dimensions, which are determined by the accents placed by the authors. Thus, the concept of "social security" is considered within the framework of the abstract dimension, the subject dimension, the large-scale dimension ^{[2, p. 103]}.

Within the framework of the abstract dimension, it is possible to identify definitions in which the emphasis is primarily on the question of who should be protected.  "The central place in the model of social security and protection begins to be occupied not only by society or a group of individuals, but primarily by an individual" ^{[4, p. 62]}. Thus, Kondratenko E.V. defines social security as "... a set of measures that allows a person to save his life, fully realize both individual and public interests" ^{[5, p. 83]}.

The subject dimension determines in which specific problem area (sphere) security violations can be noticed. Some researchers consider social security as protection from a complex of threats and dangers not only of a social nature, but also of an economic, environmental, political, etc. nature ^{[6, p. 18]}. For example, R.G. Yanovsky notes that "social security is a state of social security and includes a number of aspects, such as economic, political and environmental, in each of which there is social security in a narrow sense" ^[7]. This provision is due to the diversity and intersection of public relations and objects in need of protection, as well as the complex subordination of subjects of social security.

The large-scale measurement describes the level of social security ^{[8, p. 14]}. For example, Plotnikov V.S. interprets the concept of social security as "reliable protection of vital interests of social subjects at macro and micro levels, preservation and development of human potential, life support systems of people, the enduring values of their lifestyle, moral behavior and activities" ^[9].

Thus, there is currently no single generally accepted concept of social security in Russia, which justifies the need for its official definition. In this regard, the most interesting, from our point of view, is the definition proposed by Margulyan Ya.A. Considering social security as part of the national security system, the author defines it as "an integral concept denoting the state and ability of the state and public system of the country to ensure the effective functioning of the social sphere, prevent destructive phenomena and processes, preserve and to develop the conditions, means and methods of socialization of a person, observance in society and the state of his lifestyle, well-being, inalienable rights and freedoms, spiritual and moral values" ^{[10, p.6]}. Here, attention is focused on the need to ensure the security of a number of subjects that are represented by the state, civil society and the individual, whose security is often reduced in the face of modern challenges.

At the same time, social security should be ensured not only during crisis periods, but also under normal conditions ^{[11; 12, p. 554]}.

Currently, it is not possible to conduct a comprehensive assessment of social security in Russia due to the lack of a unified terminological, criteria, indicative and information basis for such an analysis and assessment. In addition to the concept of social security, there is also no specific list of its criteria and indicators in the legislation of the Russian Federation. In this regard, in the works devoted to the study of this issue, the authors are forced to limit themselves to analyzing the indicators of the social block (social component) within the framework of economic security. At the same time, carrying out such an analysis is also very difficult, since there are no threshold (maximum permissible) values of these indicative indicators at the legislative level, acting as a kind of signal landmarks and safety boundaries, in connection with which the authors either accept the values proposed by other scientists as thresholds, or determine them in an expert way. Of course, taking into account that social security is a multidimensional phenomenon and a multifaceted system that is in constant dynamics, it is impossible to set constant thresholds for it, and, indeed, it is not necessary, since they must be adequate to the existing conditions and the level of socio–economic development of the country, and, therefore, also be dynamic. At the same time, we are not talking here about the fact that thresholds, as well as the indicators of social security themselves, need to be set and/or reviewed monthly or even annually (which would be a serious problem for the authorities). In our opinion, they should, at least, be synchronized with the indicators reflected in the strategic planning documents, and, consequently, the time lag of their changes should correspond to the "bifurcation point" of the entire state social policy as a whole. Thus, a necessary condition for the formation and assessment of social security is the normative and legal consolidation of its indicators and their threshold values.

Based on existing scientific developments, strategic planning documents, as well as publicly available statistical data, we have evaluated and analyzed individual indicators of social security of the Russian Federation in modern conditions. To do this, an index method was used, based on the so-called zone theory of ranking indicators, proposed by Senchagov V.K. and Mityakov S.N. ^[13].

The exceptional advantage of this method is that it allows you not just to see the ratio of actual and threshold values, but to determine the degree of their remoteness from each other, and, accordingly, the risk zone of social security. To compare and analyze quantities that differ in different dimensions, they are reduced to a dimensionless form using a certain normalization and displayed in a single coordinate system.

The calculations made it possible to determine the normalized values of social security indicators in Russia (Table 1).

Table 1 – Normalized values of indicators of social security of the Russian Federation for the period 2017-2021.

* From 2021 - the proportion of the population with monetary incomes below the poverty line

Calculated by the author. For 2022, the source data are not presented in full in open sources, which did not allow calculations to be made at the time of writing the article.

A visual representation of the risk level of the main indicators of social security is provided by a petal diagram constructed on the basis of normalized values (Fig. 1). On it, the risk zones are marked with corresponding grid lines, and the real indices are reflected in the nodes of the corresponding indicators and connected by colored lines.

Compiled by the author according to Table 1

Figure 1 – Dynamics of social security indices of the Russian Federation in 2017-2021

 It can be concluded that currently two indicators – the "Unemployment rate" and "The share of priority social, transport, engineering infrastructure facilities available to disabled and other low-mobility groups of the population in the total number of priority facilities" are in the zone of stability. In our opinion, this situation testifies to the effectiveness of measures of state support for the sphere of employment implemented by the authorities of the Russian Federation in recent years, as well as to the increased attention of the state and society to the problems of persons with disabilities.

The indicator "The proportion of the population with incomes below the subsistence minimum", reflecting the level of poverty in the country, is located in the zone of significant risk. Despite a certain positive trend of this indicator in 2021, its chronic location in a significant risk zone indicates the presence of systemic problems in the economy as a whole and in the social protection system in particular.

In 2021, the indicator "Conditional depopulation coefficient" crossed the border of transition from a zone of moderate risk to a zone of significant social security risk, which indicates the growing disproportions between the number of deceased and born citizens in the country and, taking into account the negative dynamics of the "Total Fertility Rate" compared to 2017, requires increasing the effectiveness of state demographic policy and healthcare systems.

The remaining indicators of social security in 2021 were in the zone of moderate risk, however, in our opinion, the crucial point in this case is not the fact that a certain indicator is in this zone, but its positive dynamics or its absence during the analyzed period, for example, according to indicators such as the "Ginny Coefficient" and "Life expectancy at birth".

The next stage of social security research is to conduct an integral assessment of its level. To do this, it is necessary to calculate an integral index, which is a weighted average (arithmetic mean) sum of normalized indicators.

To assess the overall level of social security, its integral index is compared with a unit (integral threshold). The value of the integral index less than one indicates a crisis state in the studied area.

Throughout the analyzed period, despite the emerging positive dynamics, the integral index of social security calculated by us is far enough from its threshold value, which indicates not just the presence of certain destabilizing factors, but permanent systemic problems in the social sphere, coherent effectiveness of the state socio-economic policy (Fig. 2).

Compiled by the author according to his own calculations

Figure 2 – Dynamics of the integral index of social security of the Russian Federation in 2017-2021.

           A key feature in Russia is "the active role of the state in regulating socio-economic processes, which assumes a significant part of the responsibility for financing basic social services, creating social infrastructure, ensuring the protection of the population, including its social security" ^{[14, p. 15]}.

            At the same time, the conducted research indicates the need to search for new methods and tools of financial regulation of social processes that can qualitatively affect the level of social security in the country. There is no doubt that it is necessary to radically change the approaches to public administration, and, accordingly, financial regulation, moving to systemic innovation practice. As it was noted earlier, currently there is a clear underestimation of the role and importance of social innovations in overcoming failures of state regulation and financing of social development. In particular, the lack of understanding of a certain system of financial regulation of social innovations does not allow to ensure the targeted orientation, stability and completeness of financial flows within the framework of the implementation of socio-innovative projects and financing of social innovations throughout their life cycle, which can qualitatively affect chronically unsolvable problems that hinder the improvement of social security of society and the state.

The formation of an effective system of financial regulation of social innovations should, first of all, be carried out taking into account the following conceptual elements and approaches, based on the requirements of achieving social security.

Firstly, it is advisable to develop and approve an appropriate conceptual and categorical apparatus that defines and connects the basic concepts and categories, which will allow delineating the boundaries of the lawful behavior of subjects of financial regulation and participants in the socio-innovative process, as well as embedding the applied methods and tools of financial regulation in the institutional environment ^[15]. In this regard, we propose the following definition of financial regulation of social innovation: this is the process of purposeful and systematic application of forms, methods and tools of the financial mechanism for financial support of social innovations at different stages of their life cycle for timely and full-fledged financing of the socio-innovative process in order to achieve the maximum possible positive social effect, manifested in meeting social needs of a social nature, overcoming market failures and the state, and increasing on this basis based on the level of social security.

Secondly, it is necessary to determine the subjects and objects of financial regulation of social innovations, as well as the goals and results of the impact carried out. This will make it possible to concretize the purposefulness of the financial regulation process and ensure its regularity. In our opinion, the subjects of the system of financial regulation of social innovations can be public authorities and management bodies, economic entities and citizens-initiators, who in practice are able to apply the appropriate forms and methods of the financial mechanism for financial support of social innovations as the main object of regulation. The result of such an impact should be full and timely financing of social innovations at every stage of their life cycle, and the ultimate goal is to achieve the maximum possible positive effect, manifested in meeting social needs of a social nature, overcoming market and state failures and increasing the level of social security on this basis. The successful implementation of even one social innovation aimed at solving a specific problem can have a positive social effect and significantly affect the level of social security in general. Such influence can be both direct and indirect, which is due to the strong interconnection of all elements of the social system, of which economic relations are an organic part. At the same time, the positive social effect of the implementation of social innovation can be considered as an approximation of the corresponding indicators of social security to their threshold values.

Thirdly, it is important to ensure the variability of the decisions taken and the approaches used (with an alternative set of methods and tools) of financial regulation of social innovations at each stage of their life cycle, based on the current conditions of socio-economic development of the country or territory, the effectiveness and efficiency of the previous stages of the implementation of social innovation, emerging trends and the degree of achievement of the goals. Based on this, financial regulation of social innovations, in our opinion, can be of two types: operational and strategic.

Operational financial regulation consists in the current adjustment of the set of methods and tools of the financial mechanism for the financial support of a specific social innovation, as well as the ratio and intensity of financial flows. By strategic regulation we mean systematic and planned actions of public authorities and management or an economic entity to structurally improve the system of financial regulation of social innovations, ensuring their sustainable and balanced financing, regardless of the level of initiation and implementation. Strategic regulation can take into account the experience of operational financial regulation already existing in this matter and, on this basis, adapt the methods and tools used adequately to the current state of socio-economic and digital development, or introduce new ways of financial impact.

Financial regulation can affect different levels of implementation of social innovations, while we can talk about micro-regulation, mesoregulation and macro-regulation. For example, within the framework of micro-regulation, financial impact can be directed to regulating the activities of individual initiators of social innovations or other participants in the socio-innovation process. Mesoregulation involves the formation of a set of methods and instruments of financial impact on social innovations implemented within a single territory. We are talking here, first of all, about those social innovations that are being tested in the subject of the Russian Federation in the pilot project mode. A striking example in this regard is the state (municipal) social order, which, on the one hand, is itself a managerial social innovation, on the other hand, acts as a method of stimulating financial impact on the activities of non–state service providers in the social sphere, creating the basis for the introduction of market-oriented competitive ways of providing services at the expense of budgetary funds. This social innovation is being implemented today as part of an experiment in 34 subjects of the Russian Federation. Macro-regulation affects those social innovations that are implemented nationwide.

Financial regulation of social innovations can be of a stimulating or restrictive nature. Stimulating financial impact is aimed at activating the socio-innovative activities of relevant business entities and members of the public, increasing the investment potential of social projects, attracting non-governmental suppliers to the social services market, etc. A clear example of stimulating financial impact is direct subsidization of the activities of social entrepreneurs and SONKO, grant support for socially significant projects, or, for example, a system of tax benefits and preferences for participants of the socio-innovative process.

Restrictive financial regulation is of a restrictive nature and can be applied when, for example, a decision has been made to terminate the further implementation of a social innovation due to a negative result at some stage of its life cycle or the failure to achieve the planned social effect, also in the case of a narrowing of the scope of the implementation of social innovation, entailing a reduction in the required volumes financing, etc.

Of course, in each specific case, it is possible to combine different approaches to financial regulation of social innovations, and this ensures the variability of management decisions.

Fourth, it is necessary to form a set of appropriate methods and tools for financial regulation of social innovations, based on current practice, while continuing to search and test new ways and mechanisms of financial impact on the financial provision of social innovations. This will increase the flexibility of making appropriate management decisions, adapt the process of financial regulation to the conditions of socio-economic development and to the needs of participants in the socio-innovation process.

Financial regulation of social innovations can be carried out in two main forms: in the form of direct and indirect financial regulation. Direct financial regulation implies a direct impact on the financial provision of social innovations using certain methods and tools (direct financial support for initiators (participants) of social innovations; subsidizing the costs of socially-oriented business entities; state and municipal procurement; state (municipal) order; budget investments and public-private partnerships; financing of state programs and national projects; grants; impact investing, etc.).

By indirect financial regulation of social innovations, we mean the creation of appropriate conditions and opportunities for the activation of the initiators and other participants of social innovations through: the formation of a system of tax and non-tax (for example, customs) benefits, deductions, deferrals and other discretionary fiscal regulation regimes; the creation of conditions for the development of alternative mechanisms for attracting financial resources by participants of social innovation the process; determining the conditions for granting preferential loans subsidized by the state; developing an appropriate system of financial sanctions; determining the level of co-financing of projects supported by grant funds, etc.

Conclusions and suggestions

The presented methods and tools of financial regulation have been tested and proved their relevance to the participants of the socio-innovative process, in this regard, it is fundamentally important to further improve and replicate them, as well as to search for new promising tools and methods of influence.

In this regard, priority areas for the development of financial regulation of social innovations to achieve social security are presented to us:

– further development and improvement of the mechanism of the state (municipal) order;

– development and expansion of the mechanism for implementing targeted consumer subsidies;

– adaptation of the project financing mechanism with state support to the social innovation sector;

– development of insurance programs for participants in social and innovative activities.

The implementation of the proposed directions will contribute to the expansion of the set of methods and instruments of financial regulation of social innovations, and a balanced combination of different approaches will allow achieving a cumulative synergetic effect in increasing the level of social security of the country.