January 7, 2015 2:37 am Published by

One of the employment phenomena of recent times is the explosion in the number of unpaid internships. In the UK and abroad many companies and organisations have organised zero-or-low pay internship programmes, ostensibly as a first step on the career ladder for young people seeking to get started in competitive industries. As the recession bit harder so these internships proliferated, suggesting that there were more factors at play than merely the cultivation of talent and offering of training and opportunities to keen young workers. Have they proven a useful tool for young graduates, or a means by which less scrupulous organisations can circumnavigate the minimum wage?

Even as of 4 years ago there were, according to the Institute for Public Policy Research, in excess of 100,000 unpaid interns in the UK, the majority of whom were young people. It is likely that there are significantly more now. Such internships tended to most accumulate in the media, fashion and legal sectors; however they are now present and growing across all industries, including real estate, hospitality and retail.

The theory underpinning them is, at least on the surface, sound, particularly from the perspective of business. They allow organisations to screen prospective candidates over time in the workplace, reduce training and long-term recruitment costs. They also allow organisations to reduce their labour costs, although this is potentially illegal- and a matter to which we shall return. The theory, for the interns, is that they get an insider perspective on their primary career field, access to the networks necessary for such a career, and a leg-up into employment. It is in the area of benefit to the unpaid intern in particular that the model falls down.

Campaigning group Intern Aware recently commissioned a YouGov study into employer internship practice, with the results of the poll proving damning of the benefits of unpaid opportunities. Only 32% of businesses that utilised unpaid internships considered them a useful recruitment tool, compared to 48% of those offering paid positions. The difference in attitude between organisations that invest in younger workers and those they don’t is clearly discernible. Of companies that offer internship programmes an incredible 26% of them offer either no compensation or, if they do, well below the minimum wage, yet 82% of respondents felt that interns were performing useful work for their business- the definition of a worker. This means that a lot of UK organisations are knowingly operating counter to UK employment law.

Figures from over the pond are equally concerning for those pursuing unpaid opportunities. When seeking work 37% of those with unpaid internship experience received an offer, a mere 1.8% more than the 35.2% of those with no experience at all. In comparison 63.1% of those with paid experience received one offer or more. Perhaps even more shockingly their starting pay was less not only than those with paid internship experience, but also candidates that had never undertaken an internship at all ($35,721, $51,930 and $37,087 respectively).

It is clear from the YouGov figures that many companies and organisations are using the unpaid/low-paid internship system as a way of bypassing National Minimum Wage legislation and in the light of this it might be a good idea for those considering these unpaid schemes to exercise due caution before pursuing this route. Perhaps the questions that they should ask are “What are this organisation investing in me as a person, what are they risking, why do they consider my labour to have no value?” Sadly, of course, for many industries these dead-end positions still represent the best opportunity for breaking through.

Fortunately the tide appears to be changing, if somewhat slowly. In May a Ten Minute Rule Bill proposed by Conservative MP Alec Shelbrooke was taken forward by Parliament, with a vote of 181 to 19, to outlaw unpaid internships. As he noted, unpaid internships are not only exploitative but are an impassable barrier for those from lower socioeconomic backgrounds when trying to enter the labour market.

For now, however, the matter of unpaid internships remains. The question that businesses and organisations must ask themselves is “is good talent worth investing in?” If an organisation is not capable of investing in those it recruits then that is indeed a cause for concern.

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