Employers, as you probably know, prefer to hire graduates with work experience. But how do recent graduates secure “work experience” without, well, working? It’s a bit of a catch-22. The only practical way is via an internship. And for many graduates, that means doing an unpaid internship.
Are all internships unpaid? No, but a significant number of them are. Sometimes students have no choice but to do an unpaid internship. For this study, we will focus on the internship trends in both the UK and the US.
We don’t mean to imply that internships – paid or unpaid – are a bad thing, far from it. They are major career boosters, not to mention an unforgettable experience. Internships enable students to pick up invaluable work skills, lay the foundation of their professional network, and get a foot in the career door.
It’s not an option for many
We’re also aware that many students can’t afford to do an unpaid internship. Living expenses are too high and most students have debts to pay off.
The situation is changing, albeit slowly. In the US, the percentage of unpaid internships fell from 50% in 2012 to 43% in 2017. Back home in the UK, the change is slower but it’s still happening. According to the Sutton Trust, as at 2018, 70% of internships were unpaid. The good news is the percentage of unpaid internships has fallen to 56% the past two years.
Still, that means that 44% of internships in the UK remain unpaid. Why is that still the case, despite stringent labour and unpaid internship laws? In this blog post, we will explain some of the possible reasons why there are still so many unpaid internships out there.
1. Because it’s always been this way
Tradition can be hard to shake off, even if it isn’t exactly good for the economy or for the well-being of students. Internships have been around since the dawn of time. They were there in Ancient Egypt, Rome, Greece, Asia, and Africa. Students would apprentice with masters to learn their craft. Many weren’t compensated – learning the trade was considered compensation enough.
After the industrial revolution, apprenticeships were replaced by a mix of job training and vocational schooling. Essentially, students had to study while working. Their work paid for their education and other expenses. In the 1960s, medical students without a license were referred to as “interns”. Later, the name was used to refer to all students who weren’t full-fledged employees.
Today, many business leaders have been unpaid interns themselves. They see no reason to change the system. You can read more about the history of internships here if you’re interested.
2. The recent recession cemented the system
The Great Recession hit the US in 2007. It was the worst economic slump since the 1929 depression. The economy shrank for four quarters, sometimes at more than 5%. The GDP growth was -8.4%. Since the US is the biggest economy and consumer in the world, the effects were felt worldwide.
Employers had empty pockets. Many major businesses were suffering losses. As a way to cut costs and still keep the business running, employers hired more unpaid interns. Interns were offered long-term contracts for little to no compensation. Around 2010, interns had to work for as long as a year without pay.
The economy has recovered since then. However, the practice of hiring interns to work for no or almost-no compensation still persists.
3. Employers are saved from having to hire paid entry-level workers
Today’s millennials are highly educated, much more so than any previous generation. They also have access to the internet, which is an almost-endless library of information. Consequently, most millennials make for skilled, knowledgeable, and capable workers. In fact, most students and recent grads can do an entry-level job without breaking a sweat.
Employers are aware of this fact. They know they could just hire an unpaid intern to do entry-level work. This saves them from having to hire a “real” worker – someone who requires wages, work insurance, accommodation, and other perks.
4. Employers also save big on recruitment costs
Recruiting is expensive. Using a recruitment agency to find a worker generally costs 20-30% of that worker’s salary, which works out to approximately £5,000. And that’s just the recruitment cost for one person.
Afterwards, the company has to pay the worker, then pay for onboarding – and if the worker is from overseas, the company may have to help with visas or finding accommodation. Of course, there’s always a chance that the worker turns out to be a bad fit down the road and has to be terminated.
Companies can save on recruitment costs by hiring interns. They don’t have to pay recruitment agencies – usually, an ad in the local paper will suffice. Also, interns are willing to work for little to no pay for prolonged periods of time. During the internship, their performance can be evaluated and employers can see first-hand if that intern would make for a good future employee. Basically, employers can “try before they buy” with interns.
5. Interns make for loyal workers – and many are desperate
When someone gives you your big break, you tend to be grateful. You’re likely to feel loyal towards that employer or organization. While you work for them, you give your best, without holding back. Sometimes, you’re even willing to work overtime for no pay. During tough times, you also think twice before leaving that employer or organization. Most interns who are picked for a much-sought-after opportunity make for staunch, loyal workers.
Further, many interns have low confidence in this economic climate. We might be headed into a recession, if you’re unaware. The supply of recent graduates is high and the demand for workers in the future may dry up. This means students will be even more grateful to receive an internship opportunity, of whatever sort. Some may say yes to the first opportunity that comes their way.
6. Employers don’t know many unpaid internships are illegal
If you’ve read this far, you may be under the impression that unpaid internships are legal. We should make it clear: they are not legal! Interns have rights, just like other workers. However, it’s a fact that both employers and interns aren’t always aware of said rights. According to research, as many as half of all employers are unaware that unpaid internships are illegal!
That means that your prospective employer might offer you a full-time job disguised as an internship out of ignorance. When is an internship illegal? If you can be classified as a worker but aren’t getting paid, it’s illegal. Of course, ignorance doesn’t work as an excuse when it comes to law. Interns have begun suing their employers for compensation, sometimes years after they did the internship.
We suspect that the majority of interns, however, won’t make a fuss. They’d rather just grin and bear it. It’s not forever, after all. If you’re in this position and want our advice, don’t be afraid to reach out for help to figure out your next move. Don’t forget, you are always in demand somewhere, sometimes more than you suspect!
Unpaid internships, in our opinion, are an unnecessary holdover from the past. They don’t serve the students, the economy, or the businesses themselves.
Despite this, you may still have to do an unpaid internship in the future. It may be unavoidable, for various reasons. Especially when it comes to interning abroad. Some countries do not allow for paid international internships. Some countries require you do an internship for least four months in order to receive some type of financial reimbursement. Make sure you look into your desired internship destination’s laws to see if you can get a paid internship or not.
But it’s not the end of the world if you do participate in an unpaid internship. In fact, it may benefit you tremendously. Still, it’s important you remain aware of your rights and don’t let anyone take advantage of you.
At Capital Placement, we will work to help inspiring international students grow their international careers. We work with over 1500 companies to ensure that you are placed in a company that values your rights as an intern and will help you flourish in your career.
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