Yesterday the Chartered Institute of Personnel and Development (CIPD) called for interns working for three months or more to be paid a training wage of £2.50 an hour. It’s understandable that young people may feel hard done by working for months without pay, but the CIPD have got it very wrong if they believe paying interns would improve our economic productivity or help more young people into employment.
As things stand, internships are in very high demand. Competition for work experience, especially within the media and marketing sectors, is high despite the lack of any remuneration for their time. This indicates what was definitely the case for me after leaving university: that young graduates and students are happy to work for no pay based on the assumption that they receive something else of value – namely the experience and contacts made.
Because I was prepared to work for free, I quickly found work experience in a PR agency – they profited from my free labour, I profited by gaining a job with them by the end of my placement. It seems that this is often the case. The Higher Education Statistics Agency showed that 22% of 2009 graduates who were employed six months later had some kind of prior work experience with that employer. Free internships seem to work well for many young people in considerably increasing their chances of employment.
If employers are forced to pay their interns even a small amount per hour then offering internships inevitably becomes less profitable to them. And this means they are less likely to offer internships, giving them less opportunity to test out graduates before offering them a job contract. So as a result more young people will be competing for a smaller pool of work experience placements, in turn leading to a less skilled graduate workforce who will find it harder to find full- time employment. This, of course, will do nothing to help unemployment figures or economic productivity.
If we really want to tackle the issue of high unemployment and low economic productivity, government should be looking into how to reduce employment regulation and barriers of entry into employment rather than considering feel – good policy ideas like those proposed by the CIPD, which although sounding appealing, do more harm than good.