Regulating AI at Work: What you need to know

It's a mixed bag!

Happy Global Payroll Week! I have been speaking about the future of pay a lot lately. There is so much innovation happening in this space. Vendors are announcing new pay engines and countries are updating their legislation. And let’s not forget that workers are rethinking the way they get paid, while many are experimenting with alternative ways to earn money.

But this is a Future of Work newsletter, and I can’t only talk about the Future of Pay. So I am writing a new one that is focused on Paying People. I just published it on Linkedin, for the simple reason that I don’t know any other network that hosts so many payroll professionals. Much more to come! And don’t worry, this newsletter will continue as usual!

Sign up for the Breaking Bias summit and join me in Amsterdam on May 11th. I will speak about Recruitment and AI. I’ll also run a workshop on Equal Pay for Equal Jobs.

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Are we ready for AI?

When people ask me about the future of work and the influence of artificial intelligence, I often remind them of the introduction of smartphones. When they first came to market, they were supposed to replace our phone, our music carriers, and our camera. When we look back, smartphones did indeed replace our corded home phones. But last year was a record sales year for vinyl albums or LPs. And people continue to buy cameras. So, what gives?

We saw what was in front of us, but we could not imagine the possibilities. We are not creative enough. We did not foresee that our phones would replace our bank card and our travel ticket. We did not fully grasp that we would use our phone to communicate with other people through apps, but not to call. That we could use it to scan our groceries and become the checkout cashier.

And that’s how I look at AI - do you also feel like the past few months have been exhausting? With all kinds of people speaking about the benefits, the dangers, the pitfalls? Announcing it’s the greatest thing ever? Proclaiming it’s the end of the humanity, the workforce and even predicting the end of the world?

I think it’s time we all take a deep breath. It’s great to brag about the possibilities, but the reality is, we simply don’t know what will happen. We always overestimate a technology’s opportunities in the short term and we underestimate what it actually does. See the smartphone above. We did not suddenly have all kinds of innovative apps: it took years of trial and error, of finding out what people did and did not like. We installed apps that turned out to be popular for a few weeks, and then burned out. And a few actually made the cut to become household items.

But when it involves people, and especially employees, we need to understand exactly what is going on. We can’t just go ahead and test a new technology on the workforce because “everyone does it”. We must proceed measured and carefully. I’ve written extensively about what can happen when you let algorithms make work decisions for you. I suggest you read Thomas Otter’s call to action why CHROs shouldn’t leave AI to the tech-bros.

And that’s why I recommend that you read the new report AI and Human Rights, that was published by All Tech Is Human. The report states:

Applied unconsciously, AI tools will continue to recreate existing social norms, biases and power structures. Developed thoughtfully, they can help transform society for the better.

The report gives an overview of key issues and describes seven key areas of AI & Human Rights. It’s written in such a way that the examples are easily accessible, no prior knowledge required. It includes interviews with community leaders, who share their insights. And the report also proposes the following list of values, that should be considered when evaluating the use of artificial intelligence:

• Transparency

• Explainability

• User notification & consent

• Oversight & accountability

• Due process & redress

• Privacy by default

• Participant centered

• Conducting impact assessments

• Creating standards, regulation and legislation

I am sharing the full list with you because I think it’s worthwhile to use it as a base when you talk to your HR Tech vendor about their use of AI. I’ve seen a high number of “we now offer ChatGPT functionality” press releases, almost as if vendors are afraid to be late to the party. But let’s keep in mind that ChatGPT has only been available since November of last year. And one of the major concerns that keeps coming up, is the inherent bias in the engine. You can find enough examples on social media. Is that something you want to expose your workforce to? I am all for experimenting with new technologies, but this one seems rushed. Although I am happy to be proven wrong!

What could AI mean for you?

If you find it difficult to imagine what AI could mean for you and how it will change work, then download this excellent report The Age of Creative AI. The report makes four predictions about AI, of which the last one “Creative AI will completely disrupt knowledge work” is the most applicable for Future of Work readers. What I especially like is that the report includes four counter perspectives to reflect on, and an overview of how various industries will be impacted.

And finally, a new study into the use of generative AI at a customer services company by researchers at Stanford University and the Massachusetts Institute of Technology showed that productivity increased by 14%. They tested the impact of a conversational assistant on the productivity of customer support agents. And even though 14% seems moderate, the average hides the fact that highly skilled workers didn’t experience much improvement.

But the lowest skilled workers saw a productivity improvement of 35%! And new workers were able to ramp up significantly faster than before. The researchers also point out that this likely means that compensation models should be adapted, as AI might ultimately narrow the gap between low- and high-skilled workers. And that’s a question to explore another day.

AI legislation is moving ahead

Governments are getting in on the action. In Brussels, the European Parliament is debating the Artificial Intelligence Act. The law will strengthen rules around data quality, transparency, human oversight, and accountability. The Act also addresses ethical questions and implementation challenges for specific industry sectors. As you may understand, there is a fine line between protecting the public and allowing innovation to not fall behind other regions with less regulation. The Act tries to balance that (too early to tell if they succeed though).

The proposed framework determines the level of risk an AI technology could pose to the health and safety, and fundamental rights of a person. The framework includes four risk tiers: unacceptable, high, limited, and minimal. AI used in systems for education and vocational training, as well as AI used in systems for employment, workers management and access to self-employment all fall in the high-risk tier (Annex III). In other words: all Future of Work solutions that include AI will be considered high risk.

The Act also mandates that AI systems that are intended to interact with natural persons must be designed and developed in such a way that natural persons are informed that they are interacting with an AI system (Art 52).

The new European Artificial Intelligence Board will oversee the implementation of the regulation and ensure uniform application across the EU. Non-compliance fines can reach up to €30 million or 6% of global company revenue.

What’s happening in other regions? The U.K. government published its AI regulatory framework in March 2023. China started to implement a regulation that governs the way technology companies can use recommendation algorithms in March 2022. The US released a Blueprint for an AI Bill of Rights earlier last year and is seeking public input on AI accountability. I will keep you posted on further developments.

Be curious, stay cautious, experiment!

When I speak about the Future of Work, this is my audience call to action. And it also applies here. As we venture into the era of AI, it is crucial to approach it with a sense of responsibility and caution. The unknown consequences of adopting AI into our daily lives, particularly in the workforce, demand our attention to ensure a thoughtful and ethical implementation. To navigate this uncharted territory, I recommend that you read the reports I mentioned above. They provide valuable insights into the potential impact of AI and the principles that should guide its usage.

When you are considering the adoption of AI solutions, especially in the HR Tech domain, engage in open conversations with your vendor(s) and inquire about their adherence to the values outlined in these reports. Ask them to explain which algorithms they use and how they work. If they find that difficult, or they don’t become specific, that’s a red flag. Be mindful of the potential for rushed or superficial implementations and be open to exploring alternative perspectives.

Keep an eye on the evolving AI legislation landscape to ensure that your company remains compliant with emerging regulations and ethical standards. As AI continues to progress and reshape the workforce and our lives, it is essential to stay informed, prepared, and vigilant. We must ensure that we reap the benefits while at the same time minimizing the risks and unintended consequences.

Let’s try to shape the future of AI in a way that is both innovative and human-centered. The people that work for us deserve as much. And if that’s not enough for you, soon the law will require it.

Update: Equal Pay for Equal Jobs

Quick update: A month ago I wrote about the new Equal Pay for Equal Jobs legislation in Europe. On April 24, the Directive was adopted by the European Council, and so we now have a timeline:

• May 2023: Rules will come into effect after publication in the EU Official Journal

• May 2026: Deadline for countries to implement the Directive into national law

• May 2027: First annual report due for companies with more than 250 employees

Don’t waste any time figuring out if you have a pay gap. Closing it takes time and money, especially when it’s large!

Have a great day,
(and make my day by subscribing to Paying People!)

Anita