New Economy Journal

Unpaid Internships: Opportunity or Exploitation?

The Young Person’s Issue

Volume 1, Issue 5

August 2019

By - Max Resic

Piece length: 1,313 words

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How is this New Economy? For The Young Person’s Issue, NEJ reached out to youth peak bodies Interns Australia and Foundation for Young Australians to get their visions for the new economy. The following contribution from Interns Australia addresses the issue of unpaid internships. Unpaid internships are less likely to result in jobs than paid internships, but for those jobs which do result from unpaid internships this presents an issue with equality. More broadly, this is about the demand for fair pay for fair work, which is a key part of the new economy agenda.

Contents

[1] What’s wrong with unpaid internships?
[2] Interns Australia - who are we?
[3] Our work to help achieve a just economy

What’s wrong with unpaid internships?

Some of us will go to great lengths for a mere sentence on a resume. How can you blame us? The expectation that graduates are immediately job-ready after university pressures us into undertaking unpaid work arrangements to remain competitive in a crowded graduate market.

A simple search on any popular online job board such as SEEK or INDEED reveals an abundance of internship opportunities in industries as diverse as journalism, marketing, architecture and fashion. Whilst such opportunities can be a stepping stone for bigger and better things, there is a growing concern that unpaid internships have become a requisite for securing paid employment.

There is now a widespread view that internships allow a job seeker to connect with a potential employer, demonstrate value, and leverage the internship to secure paid employment. However, statistical and anecdotal evidence does not support the view that internships lead to paid employment with the same employer. This was the case for 78.61 per cent of the 416 respondents in Interns Australia’s annual survey.[1]

 Interns Australia survey data also demonstrates that unpaid internships are far less likely to result in an offer of employment compared to paid internships, with only 19.83 per cent of unpaid interns receiving a job offer with the same employer. This compares with 35.42 per cent of those in paid internships.[2] Despite these figures, many young people view internships as necessary to securing paid employment, with 51 per cent of respondents considering internships a prerequisite to finding permanent employment.[3]

Such a mindset creates a perceived need to intern among young people and job seekers, leading to a growing number of people who are willing to work for free due to a misconceived fear of missing out. With Australia’s youth unemployment rate at 12.9 per cent in May 2019 (compared with the general unemployment rate of 8.8 per cent),[4] this is understandable.

So how did we get here? The bulk of this relates to the Fair Work Act 2009 (Cth) (the Fair Work Act). The terms "internship" and "intern" are not defined in the Fair Work Act and have no meaning at common law. The definition of "employee" under the Fair Work Act does not provide clarity on whether interns should be paid either.[5] While the Fair Work Ombudsman has provided some guidance on delineating those situations where an intern ought to be paid, such as when the intern is doing productive work,[6] there is insufficient case law to provide firm views that would effectively curb exploitative unpaid internships.

Many employers have sought to exploit the legal loopholes surrounding internships and the droves of young people desperate to find work. An example of this exploitation is the recent case involving online retailer Her Fashion Box which was fined $330,000 for underpaying staff close to $40,000. The court found one graduate graphic designer was unlawfully classified as an unpaid intern when she was in fact an employee doing productive work such as creating digital assets for the business. The employee worked two days per week for nearly six months before receiving a one-off "Christmas bonus" of $1000.[7]

Unfortunately, workplace exploitation is not uncommon and Her Fashion Box is not an isolated case. According to Muffin Break general manager Natalie Brennan, Millennials have been given an “inflated” sense of self-importance due to social media and are no longer willing to do unpaid work to advance their careers. “There’s just nobody walking in my door asking for an internship, work experience or unpaid work, nobody,” Brennan told news.com.au.[8] Such comments signify an expectation that interns should feel privileged to work, albeit for free.

Aside from their legal ambiguity, perhaps the most concerning factor of unpaid internships is the role that unpaid work plays in perpetuating disadvantage. Unpaid internships limit access to only those young people who have the financial capacity to work (at times on a full-time basis) without pay, thereby exacerbating social exclusion for those who cannot afford lengthy periods of unpaid work. The potential financial loss from unpaid internships is also significant. Interns Australia found that the median length of an internship is 45 days (nine weeks), meaning the average unpaid internship costs the intern $5,913.18 in foregone wages based on the national minimum wage.[9] Additionally, as the employer is not providing a wage, the absence of income is a burden carried by the intern or by those who support them such as parents or the taxpayer. When external financial support is not available, a person who cannot fund periods of unpaid work is prevented from accessing internship opportunities and potentially the graduate job market.

In an employment landscape where internships are a requisite for paid employment, employers will confront a significantly reduced talent pool as competent talent from lower socio-economic groups is excluded from consideration. The consequence is that the graduate talent pool will be based on the resources available to the individual rather than merit, which is particularly concerning from a productivity perspective given the known commercial advantage of a more diverse workforce. This is not only concerning for issues of equity and access, but will also lead to a productivity drop as less proficient but wealthier graduates are preferenced over their more-proficient but less wealthy counterparts.

[2] Interns Australia - who are we?

Interns Australia is a direct response to the current internship climate in Australia. Our directors and founders have first hand experience with paid and unpaid internships and believe that simple yet significant changes can be made to advance the rights of interns. Founded in 2013, we work with interns, employers, industry, governments and the community to promote the value of quality and equitable internships. Our work consists of raising awareness about the benefits and challenges of internships, undertaking research on internships and helping organisations to establish, review and improve their internship programs.

[3] Our work to help achieve a just economy

One of Interns Australia’s primary focuses is its National Fair Internship Pledge (NFIP) – a solution to the proliferation of unpaid internships. Our research shows that 87 percent of internships in Australia are unpaid; interns are particularly vulnerable to bullying and harassment; and there is a growing concern around the legality of internships.[10] The NFIP seeks to address these issues by recognising and promoting employers that are committed to offering ethical and paid internships available to Australians from all socioeconomic backgrounds. By joining the NFIP, employers are helping to achieve greater diversity and inclusion while also creating a culture that values and promotes fair and quality internships in Australia.

Under the NFIP, employers offering internship programs that are committed to meeting best practice standards can register for a review of their program. Once approved, recognised employers are able to use the NFIP logo to promote their internship program as among Australia’s best. In addition, Interns Australia will promote their internship program to its network of over 8,000 followers. The NFIP is a priority for Interns Australia in 2019 and have signed up organisations including the Victorian Trades Hall Council, the Australian Institute of Management and the Department of Infrastructure, Regional Development and Cities.

Going forward, Interns Australia believes that a Parliamentary Inquiry is an appropriately serious and sophisticated forum to develop a solution to an issue that affects many young Australians and is expected to affect many more in future without action. A Parliamentary Inquiry would analyse the extent of unpaid internships in Australia, review the abstruse legal status of internships under the Fair Work Act and consider the role of regulators in overseeing internships in Australia. Interns Australia believes the ideal definition of an "internship" is a limited paid period of work practice on a spectrum of apprenticeship arrangements undertaken with the aim of integrating young people into the labour market.

Is it too much to ask for a fair day’s wage for a fair day’s work?

 

  • [1] Interns Australia Annual Survey 2015, available online: http://www.internsaustralia.org.au.
  • [2] Ibid.
  • [3] Interns Australia Annual Survey 2014, available online: http://www.internsaustralia.org.au.
  • [4] Interns Australia Annual Survey 2014, available online: http://www.internsaustralia.org.au.
  • [5] The one exception to the above distinction is where an unpaid internship is part of classified as a vocational placement such as a work integrated learning course through university.
  • [6] The Fair Work Ombudsman has advises that an intern is an employee if they are expected to perform tasks that an organisation needs to be done and they are not altruistically offering their services as a true volunteer would. If so, the intern must be paid the relevant minimum wage. An intern is therefore either an employee or has no legal relationship whatsoever with the host organisation.
  • [7] Anna Patty, ‘Exploitation shark tank fashion start up fined for underpaying workers’ Sydney Morning Herald (online), 1 March 2019 https://www.smh.com.au/business/workplace/exploitation-shark-tank-fashion-start-up-fined-for-underpaying-workers-20190301-p5113k.html.
  • [8] Ben Smee, ‘Muffin Break faces backlash after boss says millennials wont do unpaid work’ The Guardian (online), 24 February 2019. https://www.theguardian.com/australia-news/2019/feb/24/muffin-break-faces-backlash-after-boss-says-millennials-wont-do-unpaid-word.
  • [9] Interns Australia Annual Survey 2015, available online: http://www.internsaustralia.org.au.
  • [10] National Fair Internship Pledge (15 July 2019) Interns Australia https://internsaustralia.org.au/national-fair-internship-pledge/.

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