Are you comfortable that you’re getting value for money? An inside account on the intricacies of unpaid internships…
For a long time now, there has been a debate raging about unpaid internships and I wanted to take some time to clarify our position. This follows both our original blog on this subject (in the words of the original protagonist) ‘It’s my work, he’d say, and I do it for pay…’over a year ago on 1st December 2009 (in response to a BBC debate on Intern Abuse) and the proceeding comments in August last year (following our failure to bring together an Internship Alliance to try and lobby the new government to incentivise companies to operate paid internship schemes).
The song effectively remains the same:
“Today, more and more actual graduates are resorting to internships and in the brave new world, it is only right that if you are adding value to a company you should be paid at least the National Minimum Wage (NMW – approx £210 a week). Social mobility is key and unpaid internships discriminate against people who simply can’t afford to work for free. But in these dire economic times, with companies struggling to make ends meet, we must be careful not to scare companies away from opening their doors to young people all together. They need to be incentivised to understand their obligation to help the youth of today; not named and shamed because they can’t.”
Many will argue that not paying interns NMW is illegal. I suspect this is probably true but so is smoking cannabis and approximately 1 in 4 16-25 year olds have broken the law and tried it. What I am more interested in is the morality of not paying interns.
An article on Business Link’s website makes it very clear as to who is and who isn’t entitled to NMW. As it infers, my mother who volunteers for the local hospice (a charity although by law voluntary workers can work for any of charities, voluntary organisations, associated fund raising bodies or statutory bodies) is not entitled to minimum wage (and nor would she want it) because she is a volunteer – and so does not have any contract (written or verbal) to perform work or provide services. Anyone who falls outside of this is entitled to minimum wage. This probably includes most interns.
What about undergraduates? Along these lines, for anyone who is shadowing a company or learning from them as in work experience, then there is not the obligation to pay them because they are not providing a service or working under contract. On occasion, undergraduates are exempt from NMW (usually if their tutors agree that the internship is related to their course and they are not performing a service to the host company). During my time at university I did 3 internships over 3 summers and each of these paid me in excess of minimum wage (one even gave me a bonus at the end). I’d like to think this was because in each case I provided a service that added value in excess of the value I derived from the internship experience.
Legally, isn’t this a grey area? Yes, but what matters for me, as I have suggested above, is that if someone adds (monetary) net value to the entity they work for (or be it future value) then morally they should be rewarded for it irrespective – and this we see as the acid test. Along these lines we are very happy to see companies offer ‘work experience’ for up to 2 weeks – and we would encourage them to pay expenses during this time. Any longer than this though and the chances are that an individual will be adding value and so should be paid accordingly.
What about the BBC and Parliament? I am not exempting these institutions that are renowned for not paying their interns but arguably the interns are deriving more value from the experience and so do not pass the acid test. If though (as is often the case with smaller companies) there is a ‘job description’ or a list of responsibilities then the logical conclusion is that the intern is going to be adding value and should be paid accordingly!
I am no socialist – I view myself as a liberal conservative, a proponent on free market economics and people ‘getting on their bike’ (albeit with the safety net of a welfare state) – but I am tiring of companies (particularly in some distinct parts of the creative industries) telling me that they used to work for free and so their interns can too. I do not see why anyone should pay their interns (especially in this day and age with student debts as they are) anything less than I pay my cleaner.
What about start-ups? WEXO is a start-up and we pay our interns. I don’t feel comfortable asking people to help me build a company for free. I am encouraged to see a number of start-ups round London doing the same thing. I’m all in favour of getting young people in to experience start-up life and entrepreneurship but not if they’re a substitute for employees. If you can’t afford to pay your interns or grads, you should probably wait until you can, question your business model, or look at some other form of commensurate remuneration via say equity or (bizarrely in an equivalent move to what Barclays Capital is suggesting for bonuses) even bonds (in simple terms, IOUs). This might not stand up legally but it probably does ethically. If as a ‘Founder’ you choose not to pay yourself (as I myself have done on occasion) then to my mind, that is your prerogative but I suspect that in your own interest, you would be advised to make an IOU arrangement via directors loans instead of just foregoing payment. Not paying yourself does not justify not paying your workforce.
Should there be a limit to how long internships can last? Timing is one issue that we haven’t visited in past writings. In economic times like these though, internships have become a temporary employment vehicle for graduates and in line with other players in this field (including STEP whose BIS and LDA programmes we helped deliver last year. Programmes that include schemes to help incentivise companies to pay interns) we strongly suggest that internships should last no longer than 3 months. After this time, companies should either ‘step’ up to the plate and commit to a giving them a job or let them get on with finding one elsewhere. Otherwise young people will get stuck in an ‘internship trap’.
What about the new £2.50 an hour proposals from the CIPD? The Chartered Institute of Personnel Development have suggested interns should be paid £2.50 an hour which works out as roughly £400 a month (see BBC article earlier this month) As far as we are concerned, all this does is reduce the inequality. In all honesty, could you live on this?
So what? I voted Conservative, was impressed by Michael Gove when he spoke at an event I attended; and on the face of it, I can’t stand Ed Balls. I believe in cutting the deficit, to an extent; (we still have less debt as a country than Japan and Italy have had for much of the last decade as per interesting Fresh Minds article) I will hold my hand up and say that I back the hike in graduate fees. What I can’t condone is slashing investment in jobs (be in the Future Jobs Fund or private sector stimuli) and basic education (literacy in particular in this country is poor). We called, some time ago, for companies to be able to recoup the cost of hiring interns at National Minimum Wage from the recent VAT hike. This could help solve the conundrum addressed herein. Last week youth unemployment reached new record highs. And young people don’t fully understand the roles that ARE on offer hence our event on 8th February. We issued a press release for this last week but as I said in another release in June:
“Existing public sector initiatives have made no dent in this crisis; it is our opinion that if the situation is to improve, the government needs to start properly backing the private sector [not just relying on it]. The VAT hike will help UK Plc raise a much needed £13Bn but figures suggest the average return on hiring a graduate is 500% over 3 years so that’s one of the main places I’d be investing it.”