Why Unpaid Internships Matter

Courtesy of the BBC. A look at unpaid internships from the BBC Two Documentary - Who Gets the Best Jobs?
Credits: Presenter - Richard Bilton Director - Dai Richards Producer - Lil Cranfield Executive Producer -Ruth Pitt

Unpaid internships are impeding social mobility, leaving school leavers and graduates in a catch 22 situation where they are unable to get a job because they haven’t got experience, and unable to get experience because they can’t afford to work for free. This harms social mobility and undercuts the majority of businesses that operate good practices.

Why are unpaid internships bad for social mobility?

Unpaid internships shut out some of the most talented young people from the best careers, simply because they cannot afford to work for free.

The Sutton Trust estimates that one-third (31%) of graduate interns are unpaid[1], with many more unable to take on unpaid work. To compound the issue of affordability, most interns are unable to claim Jobseekers Allowance (JSA) as they are unavailable to accept offers of employment and attend Jobcentre Plus interviews. It is no wonder that YouGov polling has also shown that only 4% of the population believe that they, or someone in a family like theirs, could definitely afford to do an unpaid internship. Only 12% felt it was probably possible.[2]

Affordability of unpaid internships is a major problem. When asked, two out of five (43%) people aged between 18 and 24 believe unpaid internships act or have acted as a major barrier to getting a job.[3] Two out five (40%) people who thought about applying for an internship have reconsidered because they couldn’t work for free, while two out of five (39%) of people offered an internship have to turn it down for financial reasons.[4] It is clear that unpaid internships are locking so many young people out of professions.

The vast majority of internships are located in London[5] [6], where the cost of living is at its highest in the UK. Sutton Trust research shows that an expenses-only internship in London costs a young person £926 a month[7], a substantial cost given that most internships last between three to six months. This need to relocate compounds the problems of a lack of payment.

Given this unfair situation for young people at the very start of their pursuit of jobs, it is unsurprising that 85% of people believe that interns should be paid at least the National Minimum Wage and only 2% think interns should not be paid.[8]

How widespread is the problem?

In 2012 the Wilson Review into business-university collaboration found that

“lack of work experience appears as the key barrier to young people, including graduates, in securing employment”.[9]

As a result, interning has become a pre-requisite for many graduates looking to access the professions. In his role as the Government’s adviser on social mobility, Alan Milburn reported in March 2012 that over 30% of newly hired graduates had previously interned for their employer, rising to 50% in some sectors.[10]

The use of interns is widespread in some industries. The National Council for the Training of Journalists (NCTJ) found in their 2013 report that 82% of new entrants to journalism had done an internship, of which 92% were unpaid.[11]

Something that is clearly so important to the careers of thousands of young graduates, and yet so inaccessible to those that cannot afford to work unpaid, has meant that fair internships have been an important focus for businesses, universities, politicians and young people alike.                                       

Most interns have set hours and responsibilities and are therefore “workers”, and entitled to the National Minimum Wage. The Low Pay Commission has recently reported that it received a substantial volume of evidence suggesting a growth in the terms ‘internship’, ‘work experience’ or ‘volunteer’ to denote unpaid activities that look like work and to which the NMW should apply.”[12]

The problem is widespread. 26% of businesses with an intern admitted to paying less that the National Minimum age or nothing at all. Of those businesses paying less than the minimum wage, 82% admitted that the interns were providing useful services to the business. This is seemingly a significant breach in employment law.[13]

This can partly be explained by a lack of awareness about the law. Just 12% of employers are aware of their legal obligations to pay interns if they are “workers”.[14] 80% of young people are unaware of the Government’s Pay and Work Rights Helpline.[15]

Where possible, the law has been on the side of interns. Where young people have taken employers to employment tribunals they have been successful.[16] So far, interns have secured tens of thousands of pounds through the Courts.[17]

What do businesses think?

A growing number of businesses and employers recognise that fair internship schemes are a better solution to recruitment, as they allow them to access a wider and more diverse pool of talent. 

Many businesses now see paying interns as a moral issue, as well as a smart business decision. Two-thirds (65%) of businesses who pay their interns do so because they feel it is the right thing to do, whilst almost half (44%) believe they attract better workers when they pay them.[18] Indeed, those who pay their interns are more likely to recruit them, with 46% of employers who paid interns finding it a useful method of recruitment, with that figure falling to only 32% for unpaid interns.[19]

Who supports fair internships?

Fair internships are recognised by a range of employers (e.g. EY and KPMG) and employer bodies as diverse as accountancy’s ICAEW, PR’s PRCA[20], the creative industries’ Arts Council[21] and Creative Skillset[22], and architecture’s RIBA – which now expels members that use unpaid interns.

Social Mobility and Child Poverty Commission:  “Firms should openly advertise and pay internships a wage – not just as a matter of legal compliance but because it will enhance their ability to identify and develop talent from a wider range of backgrounds.”

McKinsey & Company:
“Not everyone can afford to take unpaid work in order to build skills or experience. Indeed, there is a risk that, by providing unpaid internships, companies exacerbate socio-economic differences”[23]

AXA UK:
[fair internships] “…would ensure a fair opportunity for everyone as they embark on their careers and allow businesses such as ours to harness the talent and skills of young people in today’s job market.”

UKCES:
“With over a quarter of the largest employers offering them, ensuring internships are advertised competitively and pay a wage will ensure they are open and accessible to all."

Pimlico Plumbers:
“It’s completely reprehensible for companies to expect interns, or anyone else, to work without pay… This is completely unacceptable behaviour”

EY:
“Young people deserve to be paid for the work that they do on internships – it’s reprehensible when they are not.”[24]

 

Other supporters

  • The Times editorial: The abolition of unpaid internships is “worthy and desirable”.[25]
  • There are high levels of support for fairer internships in the media – including major publications representing the whole political spectrum.
  • Trade unions also support action on internships, and in her Guardian profile TUC General Secretary Frances O’Grady said this is one of her priorities.[26]
  • International organisations, including the European Commission, OECD, and the UN, are all concerned about the effects of unpaid internships on social mobility.
  • In a survey conducted by Intern Aware of 37 university careers services, 81% of services said they refuse to advertise unpaid internships. While many services felt unable to offer advice on government policy, 57% said that they would support a four week limit to unpaid internships.[27]

Policy idea: a four week limit?

The four week limit is a slight tweak to the current law aimed at ending all long term unpaid internships. 

Currently, if an intern is doing real work under a contract then they must be paid, according to the National Minimum Wage Act 1998. However, because HMRC haven’t been enforcing the law properly, businesses and interns find the distinction confusing and unpaid internships continue to be found across many industries. Some companies try to get around the current law by claiming their interns aren’t working under a contract or claiming that they are on work experience and not doing real work. This makes it difficult for interns to prove in Court or to HMRC (who enforce the minimum wage) that they are entitled to be paid.

The four week limit would cap all unpaid work experience and internships (which aren’t excluded from the National Minimum Wage because they form part of a sandwich year from University or are volunteering at a charity) at four weeks. After this point, the intern would always be entitled to be paid.

What difference will it make in practice?

A four week limit will give greater clarity to employers and give greater security to young people. If the intern is entitled to be paid under the current law, they will continue to be entitled to be paid. However, after 4 weeks of interning or work experience, the intern will always be entitled to be paid.

Would it reduce the number of opportunities out there for young people?

YouGov polling of business leaders shows that a four week limit would not limit opportunities for young people. Just as many businesses said that they were more likely to recruit interns (10%) as said they would be less likely (10%) under the proposal.[28]

Who is supporting the four week limit?

There is very strong support for the proposal. 65% of businesses polled by YouGov this year want to see the law clarified with a four week limit, including support from industry groups like the PRCA, and businesses such as AXA and Pimlico Plumbers. A number of reports recently have made the suggestion, including the Sutton Trust, the Social Mobility and Child Poverty Commission and the London Assembly.

In addition, MPs voted strongly in favour of a motion proposed by Conservative Alec Shelbrooke MP in the House of Commons in May 2014 to introduce a four week limit. Although this did not make it law, it showed that MPs approved of the proposal. This led to its inclusion in the Labour Party and Green Party manifestos for the 2015 General Election.

And who isn't supporting it?

There really aren’t a huge number of people objecting to this proposal. We do know a small minority of businesses (12%) and the public (2%) don’t want to see a change, with interns continuing unpaid. Only 19 MPs voted against the policy. The CBI have also voiced some concerns.

The facts on unpaid internships

  • The Sutton Trust estimates that one-third (31%) of graduate interns are unpaid.[29]
  • Two out of five (43%) people aged between 18 and 24 believe unpaid internships act or have acted as a major barrier to getting a job. (YouGov, 2012).[30]
  • Two out five (40%) people who thought about applying for an internship have reconsidered because they couldn’t work for free.
  • Two out of five (39%) of people offered an internship have to turn it down for financial reasons.[31]
  • YouGov polling has also shown that only 4% of the population believe that they, or someone in a family like theirs, could definitely afford to do an unpaid internship. Only 12% felt it was probably possible. 74% said that they could not afford an unpaid internship.[32]
  • Sutton Trust research shows that an expenses-only internship in London costs a young person £926 a month.[33]
  • 84% of people over 35 said that a young person in their family could not afford to do an unpaid internship in London. (Survation, 2013)[34]
  • 85% of people believe that interns should be paid at least the National Minimum Wage (Ipsos MORI, 2014). Only 2% think interns should not be paid.[35]
  • 24% of internship opportunities are advertised openly on job boards, with 54% of all internship opportunities being recruited directly through universities and colleges. 37% of interns were found through family and friends. (YouGov 2015)[36]
  • Just 12% of employers are aware of their legal obligations to pay interns if they are “workers”.[37]
  • 80% of young people are unaware of the Government’s Pay and Work Rights Helpline.[38]
  • 26% of businesses with an intern admitted to paying less that the National Minimum age or nothing at all. Of those businesses paying less than the minimum wage, 82% admitted that the interns were providing useful services to the business.
  • YouGov polling of business decision makers shows that a four week limit is supported by two-thirds (65%) of businesses, with only one-in-eight (12%) opposing the legislation.
  • Polling shows that a four week limit would not limit opportunities for young people. Just as many businesses said that they were more likely to recruit interns (10%) as said they would be less likely (10%) under the proposal (YouGov 2015)[39]
  • Two-thirds (65%) of businesses who pay their interns do so because they feel it is the right thing to do, whilst almost half (44%) believe they attract better workers when they pay them. (YouGov 2015)[40]
  • People who pay their interns are more likely to recruit them. 46% of employers who paid interns found it a useful method of recruitment, with that figure falling to only 32% for unpaid interns.[41]

5 reasons to end unpaid internship

  1. Unpaid internships damage social mobility, restricting opportunity only to those who can afford to work for free.

  2. Unpaid internships are bad for business as they limit the pool of talented people who can gain experience in key sectors.

  3. Unpaid internships are often in breach of the National Minimum Wage Act 1998 when the intern is doing real work for the organisation.

  4. Unpaid internships are bad for young people – often meaning that they have to take out commercial debt to afford basic living expenses.

  5. Unpaid internships are bad for society, as they allow important industries to be dominated by people from the same social background.


[1] http://www.suttontrust.com/researcharchive/internships/

[2] YouGov polling for Intern Aware, July 2014. Full breakdown available on request.

[3] http://www.guardian.co.uk/money/2012/dec/01/interns-rebel-against-unpaid-placements

[4] http://yougov.co.uk/news/2011/03/23/investigating-internships/

[5] http://webarchive.nationalarchives.gov.uk/+/http:/www.cabinetoffice.gov.uk/media/227102/fair-access.pdf

[6]http://www.prca.org.uk/%5COver7pcofPRInternshipsareunpaidrevealsjointPRCAInternAwarestudy

[7]http://www.suttontrust.com/researcharchive/internships/

[8] Ipsos MORI/Joseph Rowntree Reform Trust, August 2014. Data available on request

[9] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32383/12-610-wilson-review-business-university-collaboration.pdf

[10] https://www.gov.uk/government/publications/fair-access-to-professional-careers-a-progress-report

[11] http://www.nctj.com/assets/library/document/j/original/jaw_report_final.pdf

[12]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226822/National_minimum_wage_Low_Pay_Commission_report_2013.pdf

[13] YouGov/Intern Aware, July 2014. Data available upon request

[14] http://www.hrmagazine.co.uk/hro/news/1019042/unpaid-internships-break-law-managers

[15] http://www.tuc.org.uk/economy/tuc-22040-f0.cfm

[16] http://www.guardian.co.uk/media/2011/may/23/unpaid-website-intern-court-victory

[17] http://www.dailymail.co.uk/news/article-2408704/Sony-pays-4-600-unpaid-intern-worked-9-5-job.html

[18] YouGov polling for Intern Aware, March 2015. Full breakdown available on request.

[19] YouGov polling for Intern Aware, July 2014. Full breakdown available on request.

[20] http://news.prca.org.uk/nick-clegg-congratulates-prca-on-intern-campaign-reaching-100/

[21] http://www.artscouncil.org.uk/media/uploads/internships_in_the_arts_final.pdf

[22] http://www.screendaily.com/news/creative-skillset-calls-for-fairer-internship-recruitment/5058047.article

[23] http://mckinseyonsociety.com/downloads/reports/Education/A4E2e_DOWNLOAD_BOOK_FINAL.pdf

[24] http://www.ey.com/UK/en/Newsroom/News-releases/12-10-24---All-internships-should-be-paid

[25] http://www.thetimes.co.uk/tto/opinion/leaders/article4242519.ece

[26] http://www.theguardian.com/politics/2012/sep/05/frances-ogrady-tuc-hope-future

[27]Intern Aware survey, conducted summer 2014. Full breakdown available on request.

[28] YouGov polling for Intern Aware, March 2015. Full breakdown available on request.

[29] http://www.suttontrust.com/researcharchive/internships/

[30] http://www.guardian.co.uk/money/2012/dec/01/interns-rebel-against-unpaid-placements

[31] http://yougov.co.uk/news/2011/03/23/investigating-internships/

[32] YouGov polling for Intern Aware, July 2014. Full breakdown available on request.

[33]http://www.suttontrust.com/researcharchive/internships/

[34] http://www.tuc.org.uk/economy/tuc-22040-f0.cfm

[35] Ipsos MORI/Joseph Rowntree Reform Trust, August 2014. Data available on request

[36] YouGov/Intern Aware, March 2015. Data available upon request

[37] http://www.hrmagazine.co.uk/hro/news/1019042/unpaid-internships-break-law-managers

[38] http://www.tuc.org.uk/economy/tuc-22040-f0.cfm

[39] YouGov polling for Intern Aware, March 2015. Full breakdown available on request.

[40] YouGov polling for Intern Aware, March 2015. Full breakdown available on request.

[41] YouGov polling for Intern Aware, July 2014. Full breakdown available on request.