Are Unpaid Internships Opportunities or Exploitation?

By Stephanie Wulf | 12 May 15

The number of young Australians undertaking unpaid internships has steadily increased in recent years. In some industries having this sort of experience on your CV is now seen as an essential requirement to land your first professional role.

One reason this trend has flourished is due to an oversupply of qualified graduates, and the commonly held view that unpaid internships offer a win-win situation: they give university students and graduates valuable experience to help launch their careers, and businesses get to take on eager, fresh talent at virtually no cost.

But it’s becoming more apparent that although unpaid internships can often provide mutual benefits for businesses and potential employees, their proliferation is having far reaching detrimental implications – not only for graduates, but for wider society too.

Intern or employee?

A prominent issue recently came to light in a landmark case before the Federal Circuit Court, where Melbourne-based media organisation Crocmedia was fined $24,000 for not paying its interns because of the nature of the work the interns were doing, such as producing radio programs and taking on graveyard shifts. The case highlighted that some Australian companies are exploiting unpaid interns to do work that paid employees would usually do.

Advocacy bodies are taking a stand. Colleen Chen, who co-founded Interns Australia, following her own firsthand experience with what she describes as “unpaid precarious work”, notes that an increasing number of interns are working for free due to gaps in employment laws and high youth unemployment rates.

“If it’s an employment relationship, you can’t just rebrand it as an internship.”

A key point she raises relates to the legal definition of an “internship”. Under Australia’s Fair Work Act, if interns are found to be doing work that constitutes an “employment relationship” they are considered employees and need to be paid. This is determined by a number of criteria including: whether the intern’s work is integral to the business, and whether the business is gaining more benefits than the intern.

This means a significant proportion of unpaid interns across the country might actually be considered to be employees under the law, and could be missing out on payment and other workplace entitlements.

As Chen puts it, “if it’s an employment relationship, you can’t just rebrand it as an internship.”

What is even more concerning, is that unpaid interns are being used to replace entry-level positions, making it even harder for those coming from lower socio-economic backgrounds to enter into professional careers. This is a cause for alarm, as young people who cannot be supported by their families, and who do not have the financial means themselves, are being left out of the game.

But we should not assume that only the poorest graduates are being left behind. Kacey Cogle, a former social studies and politics student from Sydney, recalls how, even though she came from a middle-class background, she encountered difficulties in trying to get the experience needed to launch her career:

I’ve never done an unpaid internship because I wasn’t ever in a financial position to do so. At the time, I felt like the inability to engage in these programs was detrimental to my career and I was really unhappy about it.

Unpaid internships are likely to intensify financial barriers for many students who already face rising university tuition fees, which are likely to swell over the coming decades.

If current trends continue and we want to know how bad the situation can get, let’s take a look at the United States, which Ross Perlin describes as “ground zero of the internship explosion” in his book Intern Nation. Like Chen, his own dismal experiences with unpaid internships motivated Perlin to raise awareness of the issue, and his observations are grim:

Illegal internships are flourishing as never before thanks to the Great Recession. In a time of chronic high unemployment, internships are replacing untold numbers of full-time jobs: anecdotal evidence abounds of managers eliminating staff and using unpaid interns instead.

As researchers commissioned by Fair Work Australia have highlighted, “if left unchecked, such a trend is likely to gather pace, as it has done in countries such as the United States, for the simple reason that some employers will be forced by their competitors into a ‘race to the bottom’.”

Know your rights under the law

So how can we turn the tide? Australia’s employment laws need to keep pace with the current trends and adequately protect interns. One of the first steps is to clarify the status of interns and their workplace rights.

There also needs to be greater general awareness about the relevant workplace laws. Universities should play an active role in ensuring their students understand what their rights are under the law when it comes to workplace-based learning opportunities. Job advertisers also have obligations, and can refuse to advertise an unpaid internship if they believe that it does not comply with the Fair Work Act, sending a clear message to employers.

If more people become aware of the law surrounding unpaid internships, and if students and graduates have a better understanding of their rights, employers will be more inclined to pay interns. As one public relations blog has warned its readers: “The cost in wages is marginal compared with the potential cost of legal fees or the PR damage a disgruntled ‘free’ worker might inflict upon your organisation in the age of social media.”

Finally, we must promote positive efforts that make internships accessible to all – not just those who can afford to work for free. Businesses that want to protect their reputation should lead by example and offer paid internships. Perhaps these efforts could be recognised in a similar way that the Employer of Choice for Gender Equality citations are awarded to organisations that actively commit to achieving gender equality.

All of these measures working together could help graduates significantly – to ensure they receive the workplace entitlements they deserve, to reduce exploitation, and to ensure the labour market is accessible to all.

Since we know what the situation could end up like if left to its own devices, let’s grasp the opportunity to make changes while we still can.

Stephanie Wulf is a humanitarian and development communications specialist, and holds a Master of International Law and International Relations from the University of New South Wales.

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