Social Protection of Employees as a Tool of Social Responsibility and Increase of Business Efficiency

Abstract :

The study of social protection of employees of small and medium-sized enterprises was conducted on the example of a local labour market (one of the regional centres of Ukraine). The survey included 526 respondents, including 170 business owners and 356 employees. This made it possible to compare social security performance assessments from both sides, as well as to identify the basic patterns of social protection ties as a tool for corporate social responsibility (CSR) and the economic success of businesses. As a result, it has been found that in the labour market of a country with the transition economy and the slow adoption of CSR standards, social protection for workers has numerous problems. In particular, even minimum protection standards, such as working time, holidays, wages below the minimum and inflation-related indexation, do not meet the norms. We conducted the grouping of enterprises by the level of their economic performance on several characteristics (growth of assets, sales volumes, productivity, profit availability) allowing to state that social protection of employees can be an effective tool for business development. Thus, in enterprises where the basic standards of social protection are best fulfilled, the growth of assets and volumes of sales is mostly observed (exceptions are only the guarantees in remuneration with the highest indicator in enterprises with decreasing sales volumes). Weak social protection links are only available with profitability indicators. Instead, by comparing the level of social protection of employees at enterprises with the productivity growth, a linear dependence was obtained, which proves the effectiveness of such a CSR tool as a lever for improving gross economic performance and, consequently, increasing profitability over the long term. Entrepreneurship as a form of economic activity plays a significant role in enlargement processes, integration and competitiveness improvement policies of the European Union.