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Case Study - The Impact of AI on Labour Retention

Part of the AI Faith and Civil Society Commission's work brings leading voices together to call for the protection of human values from dangers posed by AI. As part of our research stream, the AI Faith and Civil Society Commission is collating case studies that examine these risks.

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Case Study - The Impact of AI on Labour Retention

Whilst it is clear that seismic technological developments result in an increase in productivity, this article questions whether this productivity will truly translate into a net benefit for workers, and how different organisations predict AI will contribute to increasing job loss.

Klarna & BP

In May 2022, Klarna, a payment giant in the debt and credit industry, announced plans to downsize, laying off around 10% of its workforce, equating to approximately 700 positions. Sunset’s layoff tracker examines how companies like Klarna make these downsizing changes, arguing that “this decision came amid a frosty capital market for fast-growing tech companies and concerns over the sustainability of the sector's growth. Klarna's focus moving forward seems to be on leveraging technology like AI to maintain efficiency.”^[1]

This trend is certainly not limited to Klarna, BP’s Quarterly 1 report (2024) assessed how AI can be used to provide more efficiency: “The places that we are seeing tremendous results on are coding. We need 70% less coders from third parties to code as the AI handles most of the coding, the human only needs to look at the final 30% to validate it. That's a big savings for the company moving forward.”^[2]

The Global Labour Market

This trend is only set to increase. In early 2024, IMF Managing Director Kristalina Georgieva gave a holistic prediction of how AI will impact the global labour market drastically noting that it may affect up to 60% of jobs in advanced economies and 40% worldwide within two years.^[3]

Particular industries and different sectors will of course be impacted differently. A recent McKinsey report indicates that all industries will reduce staff and improve productivity, with particular affected industries including high tech, advanced manufacturing, healthcare, education, banking, media and entertainment.^[4]

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An Excerpt from the McKinsey Report: The Economic Potential of Generative AI, 2023

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Productivity increase: Does this translate to wage increases?

The McKinsey report also predicted how much value AI could add: “Across 63 use cases, Generative AI has the potential to generate $2.6 trillion to $4.4 trillion in value across industries”.^[5]However, does productivity increase translate into actual wage increase?

EPI Analysis of Bureau of Labour Statistics and Bureau of Economic Analysis Data

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According to data from the Bureau of Labour Statistics, the post-war boom led to an exponential rise in both productivity and hourly compensation for the worker.^[6]However, from 1973, net productivity in the total economy continued to rise, but hourly compensation did not. Therefore, an increase in productivity is not necessarily tied to a wage increase for workers, nor does the development of technology necessarily result in wage increases. This leads one to question whether AI developments primarily help the average person, or not.

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Mohammed Ahmed - Research Manager at the AI Faith and Civil Society Commission

Jeremy Peckham - Research Lead and Commissioner, AI Faith and Civil Society Commission

Risk Analysis against the Human Value Framework:

Truth & Reality - low risk

Authentic Relationships - medium risk - Replaces human-human relationships at work

Dignity of Work - high risk - Replaces human-led jobs

Privacy & Freedom - low risk

Moral Autonomy - medium risk - AI systems increasingly responsible for accuracy of work output

Cognition & Creativity - low risk

Governance Pillars:

Accountability

Justice

Policy Recommendations:

Companies must conduct a risk assessment of the impact of using AI technologies on their employees prior to implementation, and mitigate impact on their employees by helping to assign them to other roles or supporting them to seek further employment.

Large companies must provide upskilling to the employees who will be impacted by labour retention threats due to AI, to ensure they have skills for a job that is not foreseeably threatened by the implementation of AI

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Footnotes:

^[1]Klarna Layoffs: What Happened and Why, June 2024, https://www.sunsethq.com/layoff-tracker/klarna#:~:text=In%20May%202022%2C%20Klarna%2C%20a,sustainability%20of%20the%20sector%27s%20growth

^[2] BP 1Q 2024 Results: Webcast Q&A Transcript, https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-first-quarter-2024-results-qa-transcript.pdf

^[3] AI Will Transform the Global Economy, The International Monetary Fund, https://www.imf.org/en/Blogs/Articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity

^[4] McKinsey & Co., The Economic Potential of Generative AI, June 2023.

^[5] ibid.

^[6] Wage stagnation in nine charts, US Bureau of Labor, https://www.epi.org/publication/charting-wage-stagnation/

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Case Study - The Impact of AI on Labour Retention

This article provides insight into the type of research the AIFCS is conducting, focussing on one of our key areas: Dignity of Work. Future updates on the human values framework to come.

The Commission is proud to announce three new members of our Associates Programme, that aims to create a collaborative community of individuals and organisations interested in the intersection of AI, faith, and civil society. They will have the opportunity to participate in Commission events, contribute to discussions, and showcase their AI-related work on the Commission's platform.

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Dr Chinmay Pandya is the Editor of the Dev Sanskriti, an Interdisciplinary International Journal that addresses a abroad range of Indian intellectual interests and religious pedagogies. He is responsible to guide the ethos, academic rigour and policy implementation at DSVV. Dr Pandya is also the Chairperson of the International Festival of Yoga, Culture and Spirituality and has convened more than two hundred national and international colloquia at DSVV; and is the Co-founder of the First Centre for Baltic Culture and Studies of Asia, Founder of the South Asian Institute for Peace & Reconciliation and a Member of the ICCR Governing Council

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Dr Nathan Mladin is a Senior Researcher at the think tank Theos in London. His research, speaking and writing focus on technology ethics and theology of culture. He holds a PhD in Systematic Theology from Queen’s University Belfast and is the author of several publications, including Data and Dignity: Why Privacy Matters in the Digital Age (Theos, 2023) and AI and the Afterlife: From Digital Mourning to Mind Uploading (Theos, 2024). He is also author of ‘The Question of Surveillance Capitalism’ (with Stephen N Williams), a chapter in The Robot Will See You Now: Artificial Intelligence and the Christian Faith (SPCK, 2021).

Prof Dr Beth Singler is the Assistant Professor in Digital Religion(s) and co-lead of the Media Existential Encounters and Evolving Technology Lab at the University of Zurich where she leads projects on religion and AI. As an anthropologist, her research focusses on the human, and considers the religious, cultural, social, and ethical implications of developments in AI and robotics. Her research has been recognised with awards, including the 2021 Digital Religion Research Award from the Network for New Media, Religion, and Digital Culture Studies. Her popular science communication work includes a series of award-winning short documentaries on AI, writing and presenting a BBC Radio 4 documentary on the cultural impact of The Terminator forty years on, popular publications, science festival talks, press interviews, and international media appearances. Beth has spoken about her research at Greenbelt, at the Hay Festival as one of the Hay 30 to watch, as well as at New Scientist Live, Ars Electronica, the Edinburgh Science Festival, the Cheltenham Science Festival, and has appeared several times on BBC Click and BBC Click Live, and on BBC Radio 3 for the Year of Blade Runner. She is co-editor of the Cambridge Companion to Religion and AI (2024) and author of Religion and AI: An Introduction (2024). Her publications, interviews, and talks are all available at bvlsingler.com.