Sustainable Reduction in Administrative Costs in Social Protection Systems Through Digitalization and AI-Driven Process Automation

Efficient and financially sustainable social protection systems are essential under conditions of economic instability and increasing social demand. However, traditional administrative models are often characterized by high operational costs, procedural complexity, and delayed benefit delivery. This study examines the role of digitalization, process automation, and AI-driven administrative solutions in reducing administrative expenses while enhancing the sustainability and resilience of social protection systems. An integrated Automation Index is developed using standardized proxy indicators that reflect reductions in operational and transaction costs associated with digital and automated technologies. To assess future trajectories of administrative expenses, scenario-based modelling is applied under three digital transformation paths—baseline, moderate, and intensive. Administrative efficiency is estimated using a translog Stochastic Frontier Analysis (SFA) framework. The results indicate that digitalization and automation significantly reduce administrative costs only when supported by favorable institutional conditions, including decentralized governance, effective inter-agency coordination, and clearly regulated administrative procedures. Under the intensive digital transformation scenario, administrative expenses decline substantially relative to the baseline, while system responsiveness and beneficiary coverage improve. In contrast, weak institutional environments limit the efficiency gains of technological solutions. The study concludes that AI agents and automated systems should be viewed not as substitutes for human decision-making but as tools for optimizing administrative architectures. This transition from resource-intensive to technology-intensive models is particularly important for developing countries seeking sustainable social protection under constrained fiscal conditions.