The Sutton Trust, a charity set up to improve social mobility through education, has estimated that more than one in three graduate interns are working for no pay. The charity estimates 21,000 graduates are working unpaid and this may be even be an under-estimate, as the thinktank IPPR believe the figure to be more like 100,000. The Sutton Trust have also calculated that a six-month internship in London would cost an individual over £5,500. As a result, this bars young people who cannot be supported by their parents from obtaining experience which may secure permanent work in the future.
In an employment market where hundreds of thousands of young people are out of work and others engaged in unstable zero-hour contracts, this gives us a frightening picture of the future of the next generation of graduates. It is without a doubt that many young graduates are reliant on internships to get ‘a foot in the door’, and it remains a compelling debate as to whether people should work for free.
Intern Aware have been a forerunner in this debate and have pointed out that under employment law if you “work set hours, do set tasks and contribute value to an organisation”, you are classified as a worker and entitled to a minimum wage.
The government is launching new guidance for young people about internships and HM Revenue and Customs are carrying out checks to make sure employers who have advertised internships, are paying all their workers the correct NMW rate.
Not paying the National Minimum Wage is illegal and if an employer fails to pay out, a penalty will be issued. From 7th March 2014 these penalties for employers in breach of national minimum wage provisions increased from 50% to 100% of the total underpayment. Maximum financial penalty increased from £5,000 to £20,000
These increased penalties are definitely a step in the right direction, although there is still a lot to be done to assist graduates who are beginning their journey into the employment market. Liam Bryne, the shadow minister for higher education, is current forging this campaign and has announced that the next Labour government will change the law so interns get paid at least the minimum wage once they have been in a job for over a month. He stated that:
“Right now, those young people – who now compete with millions of low-paid graduates from India and China – face sky-high unemployment, fewer apprenticeships, tripled tuition fees and house prices five times higher than when I left school. They are the first generation to earn less than the generation before. They are more likely to live in poverty than pensioners”
In light of this gloomy future, Bryne would like to set a goal to get as many young people doing an apprenticeship as a degree by 2025, requiring every company that wishes to gain a major government contract to offer a high-quality apprenticeship.
We anticipate that with the prevalence of campaigns currently being undertaken by the Labour party and the penalties the government are currently issuing to employers, the nature of placements and internships will develop for the better, but there is still a long journey to go for legislation to change.