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Algorithmic Management in the Traditional Firm: Policy Analysis, the Role of Unions and Strategies for Successful Implementation

Algorithmic Management in the Traditional Firm: Policy Analysis, the Role of Unions and Strategies for Successful Implementation

Victor Bernhardtz, Ombudsman for Digital Labour Markets, Unionen.
Division: Sociology and humanities.

AI Systems and the Swedish Labour Market

In the coming years, cognitive computer systems (often referred to under the umbrella term “Artificial Intelligence”) – machines with increased cognitive capabilities – are likely to become an integral part of jobs and firm operations. With this development comes both opportunities and challenges. This paper investigates how to best guide implementation of cognitive computer systems in labour markets in order to harvest the opportunities, while ensuring that dystopian scenarios do not come to fruition.
This paper is a discussion on the impact of cognitive computer systems on the Swedish labour market, with specific regard to white-collar work and algorithmic management, using input from interviews with elected representatives of local union chapters. The paper argues that cooperation and negotiated principles between the social partners has the potential to increase the chances of successful implementation of algorithmic management systems.

The Automation of White-Collar Work Tasks

The so-called “Swedish Labour Market Model”[1], signified by well-developed industrial relations institutions and functional dialogue between the social partners, has been characterised by a positive attitude towards automation. Social partners have historically adopted positive attitudes towards new technology, as it enables increases in productivity that benefit both workers and employers[2]. Through technological development, dangerous, burdensome and monotonous tasks have been handed over to machines. In turn, humans have been able to move on to perform other more stimulating and productive tasks, often for a higher salary. Moreover, workers becoming redundant due to such technological progress have access to institutions for re-skilling and assistance in finding new career paths. As a result, human workers have gradually gained an increasingly important role as the supervisors of machines performing work tasks that were previously carried out by humans.
There is currently no consensus about how extensive the automation effects of cognitive computing will be on labour markets. Further, there is no common understanding regarding which sectors in which the changes will take place, or the rate at which they will occur. But there is a strong belief that this technology will contribute to a new form of automation of white-collar work. It is likely that white-collar workers will experience a level of job transformation hitherto unknown to them. However, it will still be necessary for humans to control and monitor the machines. I.e. we are unlikely to see a large number of professions vanish. What we probably will see is a transformation of a large group of professions.

Algorithmic Management and its impact on the Firm

Parallel to the debate on automation of work tasks a discussion about “algorithmic management” has emerged. Algorithmic management comprise optimized and (semi-) automated work management, work analysis and (to varying degrees) employee monitoring. A strong incentive for employers to use algorithmic management has been the potential for reducing friction in the transaction between firms and customers.
Algorithmic management has been a key factor in the rise of firms in the platform economy. Indeed, one could consider it to be what separates platform firms from “traditional” firms. On the other hand, algorithmic management brings things to the table that are interesting for traditional employers as well. This paper argues that the main beneficiaries of algorithmic management might indeed be larger, traditional, firms.

Collective Agreements and Algorithmic Management

The collective agreements reached between trade unions and employers’ organisations are the cornerstone of the Swedish Labour Market Model. In somewhat simplified terms, collective agreements are regulations negotiated by trade unions and employers’ organisations about how work is to be regulated and how surpluses are to be distributed. In Sweden, collective agreements comprehend regulations that in many other countries are stipulated by law. This provides a model for labour market regulation that is capable of embracing new phenomena, such as new technology, with relative ease.
Collective agreements are essentially technology-neutral. If collective agreements have historically focused on regulating human relationships in workplaces, the advent of cognitive computer systems will mean that the agreements will also need to apply to relationships between humans and machines in the workplace. The paper discusses what principles should guide collective bargaining of algorithmic management implementation.


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[1] Sometimes ”The Nordic Partner Approach”, “The Nordic Labour Market Model” or similar.
[2] This has been strengthened by active labour market policies, which will be laid out more in detail in the paper.