Unpaid internships: Why are most internships unpaid?

Unpaid Internships

Employers, as you have probably come to realise, 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.

For many graduates, that means doing an unpaid internship. 

Are all internships unpaid? No, but a significant number of them are, unfortunately. Sometimes students have no choice but to do an unpaid internship. For this blog, the intention is not to highlight the obvious issues with unpaid internships but to highlight some of the reasons why they exist so you get some context. We will focus on the internship trends in both the UK and the US but a lot of the information may still be relevant for other parts of the world. 

The bottom line is that internships – be it paid or unpaid – are major career boosters, not to mention an unforgettable experience in the career space. An internship enables you to pick up invaluable work skills, demonstrates to employers that you are capable of doing the role, fills up your CV to that one full page, lays the foundation of their professional network, and helps you get a foot in the career door, to mention a few obvious ways. 

As always, there’s the good and bad in everything. So, let’s start with the downside of unpaid internships.

It’s not an option for many 

We’re aware that many students can’t afford to do an unpaid internship. Degrees are expensive and college students have enough to contend with, including skyrocketing living expenses and student loans to pay off. Why would one want to work for free especially when there is an opportunity cost of either using that time to work harder on your degree or to work in paid part-time roles?  

The good news is the percentage of unpaid internships has fallen to 56% in 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.

It’s tradition!

Traditions can be hard to shake off. Internships, which are wide and varied, 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.Tradition

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 more broadly 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. 

Furthermore, a lot of universities still insist on internships being unpaid if the student is to get academic credit for the internship — more on this below. 

The Great Recession is to blame

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 persists.

Employers vs. 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 (who aren’t too keen on offering such skills for free). 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, unfortunately. This saves them from having to hire a “real” worker – someone who requires wages, health insurance, pension plans, and other perks.  

Recruitment costs

The vast majority of employers are not looking to profit from this, but some are.   Additionally, recruiting itself is expensive. In the UK, using a recruitment agency to find a worker generally costs 10-30% of that worker’s annual salary, which works out to approximately £2,500 – £5,000.

In the US, the average cost-per-hire is around $ 3,000-4,000. And that’s just the recruitment cost for one person.

Recruitment cost

*2020 Benchmark Report by Yello

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 and assist with finding accommodation and so on. 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.

Many unpaid internships are illegal 

The legality of unpaid internships is harsh terrain to navigate. Here’s the problem: there is a high chance that an unpaid internship offer is NOT legal! 

Why? Well, 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 hesitate 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! 

But just as there are negatives, there are also positives! Regardless of if your internship is an unpaid one, you can still find ways to make the most out of it and reap the many benefits it brings. Let’s dive in.


Unpaid internships are often more flexible when it comes to working hours. Usually, when working, an employer dictates the hours but when you are not compensated, you have more bargaining power and can choose more flexible hours. 

Overall, an unpaid internship comes with lower mutual expectations, which can be a great thing if you have long class schedules or exams coming up, for example, or if you’re not comfortable with the quantity or quality of work.

Fuel for your passion

The dream job, we’ve all got one. If you don’t have one at the moment, you’ll certainly start yearning once you’ve gotten into the job market. But those dream jobs are often hard to come by, especially in high-demand industries that are filled to the brim with people clambering for a position at the top companies. 

So how does it benefit you? For starters, you’ll have a much higher chance of actually securing the job. Interns are a relatively low stake investment for any company. They’re less likely to place as much pressure on you and your qualifications and/or skills as they would a full-time employee. 

Additionally, if you’re passion is something like volunteer work, there is an abundance of unpaid internships at NGOs, for example, just hoping somebody would sign up!

Test-bed for career direction

Have you ever felt that nagging feeling in the pit of your stomach? You know? That feeling of “What if this is not what I want to be doing for the rest of my life?” 

This is why internships are great! It allows you to experiment with whether or not you fit the field’s culture without actually having to sacrifice nearly as much time and energy as you would if you were investing completely in cementing a career in it. 

Whether you end up loving it, hating it, managing it or wishing you’d never even thought of it, this still provides you with a unique opportunity to upskill yourself without you losing much time during the peak years of your early career. 

College credit for you! And you! AND YOU!

Those priceless college credits come easy with internships! If you’re looking for college credits, taking an internship in a relevant industry/field could help you significantly. Besides, internships are a lot more flexible! For example, virtual internships are on the rise, which significantly eases any time management issues you might be having. 

You can reach out to your institute or university to see if it’s possible to enrol in an internship in line with your field. Paid, unpaid, it doesn’t matter! You’ll be acing that degree in no time either way! See, by doing an internship for credit, you often get to opt out of classes and exams which you would have to do otherwise. (Yeah, it’s a little sneaky, but it works!)

P.S., You’re basically bolstering your CV and adding more experience to it by doing an internship. You don’t really get paid to go to class, so using that time to add an extra dimension to your CV could be killing two birds with one stone. 

Final thoughts

Unpaid internships, in our opinion, are not particularly necessary, but you may still have to do an unpaid internship in the future. Don’t get us wrong, paid internships are brilliant, but unpaid ones may be unavoidable for various reasons, especially when it comes to interning abroad.

Some countries do not allow for paid international internships, while some countries require you do an internship for at least four months 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. 

It’s not the end of the world if you do participate in an unpaid internship if you can afford to do so. It will still benefit you tremendously. Regardless, it’s important you remain aware of your rights and don’t let anyone take advantage of you! 

At Capital Placement, we work to help inspire students and graduates to grow their international careers. We work with over 2000 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.

While unpaid internships are sometimes unavoidable, we’ve worked tirelessly to secure paid internships for over 95% of our candidates; and we aim to get this to 100% by 2023! 

P.S. Give our Role of an Intern post a read if you’d like to learn more about what to expect from your internship!



Kahless is a writer with a special interest in sociology. He spends much of his free time travelling, reading, writing, and stopping his cats from ripping apart everything he owns. It’s advised to bring along a strong cup of coffee (3 espresso shots minimum) when approaching him.

Keep reading