US Firms Use Software to Sanction Workers at 16 Times European Rate, OECD Finds

Two-thirds of American businesses deploy workplace software to penalize low-performing employees, compared to just 4% of firms in major European economies, according to a survey published by the Organisation for Economic Co-operation and Development (OECD) and reported by The Next Web (https://thenextweb.com/news/oecd-algorithmic-management-sanction-gap-ai-act-blind-spot). The findings underscore a wide divide in how employers in the United States and Europe manage and monitor staff through digital systems.

The survey, conducted by market research firm Ipsos between June and August 2024, polled 6,047 mid-level managers at enterprises with 20 or more staff across six countries: the US, France, Germany, Italy, Spain, and Japan. While baseline adoption of software to instruct, monitor, or evaluate workers is high in most surveyed countries—90% in the US, 81% in France, 78% in Germany and Spain, 76% in Italy, and 40% in Japan—the specific uses diverge sharply.

Beyond automated sanctions (67% in the US versus 4% across the European countries surveyed and 1% in Japan), American firms are far more likely to deploy software to reward performance (83% versus 13%), maintain visible staff leaderboards (50% versus 7%), and monitor the content and tone of calls, emails, or conversations (55% versus 6%). In addition, 72% of US employers track work speed, compared to 15% in Europe. Overall evaluation software usage stood at 90% in the US, 35% in Europe, and 11% in Japan.

Examining 15 distinct enterprise software use cases, the OECD found that more than three-quarters of American companies use ten or more, whereas European firms typically use three to five, and nearly one-third of Japanese adopting firms rely on just one. The OECD attributes this variation to regulatory architecture, contrasting the European Union's centralized, rights-based framework and mandatory employee representative consultation requirements with the fragmented US system of agency enforcement and local rules.

Within Europe, national legislation and enforcement also drive differences. Italy's 2022 Transparency Decree covering automated decision-making and Spain's 2021 Riders' Law contributed to workplace audit rates of 83% and 78%, respectively. Enforcement actions, such as a 2.6 million euro data protection fine against Glovo subsidiary Foodinho in Italy, have further reinforced compliance.

Crucially, the OECD noted that most algorithmic management tools do not rely on artificial intelligence. Instead, employers rely on standard enterprise software, citing systems such as SAP, Workday, Oracle, Jira, Asana, Trello, and standard time-tracking applications. The report warned that legal frameworks aimed narrowly at artificial intelligence, including the EU AI Act, leave unaddressed gaps for conventional software that incorporates tracking and scoring functions.

The survey also highlighted privacy constraints, showing that 90% of US managers report employees cannot opt out of data collection, and over half report workers cannot request data corrections. The OECD noted several methodological constraints in the study, including response rates ranging from 2% in Germany to 6% in Japan, reliance entirely on manager self-reporting rather than employee surveys, and a broad definition of adoption that includes basic data collection without algorithmic processing.