Why National Minimum Wage does not mean a fair deal for interns

Nick Clegg launched his new social mobility strategy last Tuesday to much fanfare. He attacked the Labour administration for their record in helping those from poorer backgrounds get on in life and, among other things, announced the Government would be doing more to ensure internships are open for all. Inevitably the media picked up on the Deputy Prime Minister's own nepotistic professional advances – his father secured him a placement with a Finnish bank, a 'Clegg up' – and ridiculed his apparent hypocrisy. While I can appreciate the media love some juicy irony to feed off, ultimately it is fairly irrelevant if the man trying to change a flawed system once benefited from it.

More significant was the reignition of the debate surrounding National Minimum Wage and internships. The 'pay all interns' lobby have been understandably vocal on the matter, and I welcome campaigns to raise the standards of internships for all. However I do not believe that enforcing NMW for every single internship is either appropriate or necessarily beneficial for interns themselves.

I think the first thing to point out is that, rightly or wrongly, Clegg has not signalled he is 'championing a drive to end unpaid internships' as the Guardian puts it. He has been more subtle in his language: there is talk of fairness; better access; and appropriate remuneration. He has not, however, said that every internship must be paid. Indeed, the actual text of Opening Doors, Breaking Barriers (the document outlining the Government strategy) says of internships:

            “financial support could consist of either payment of at least the appropriate national minimum wage rate, or alternatively payment of reasonable out of    pocket expenses in compliance with national minimum wage law.”

To my mind that still leaves plenty of room for doubt as to whether an internship automatically qualifies for NMW or not.

Secondly, internships are still a new enough concept that there is not a broad consensus on what makes one. I know of companies who run two-week 'internship' programmes which give candidates a taste of life in their business, while there are firms which take on interns for a year as full members of staff. Clearly it is absolutely necessary to offer payment for some internships but to make the sweeping statement that all internships should be paid does not take into account the diversity of placements on offer.

I think it is fair to say that if all companies were forced to pay interns then the number and quality of internships would decrease. I am aware that many look to the original introduction of NMW for precedent in relation to a potential decline in opportunities available. They argue that as there was no negative affect then there would not be for internships. However internships are largely non-essential positions that, contrary to what some groups argue, are not replacing entry-level roles. Rather, they give students and graduates the chance to demonstrate their ability and earn themselves a job where they would not have been offered one without the extra experience and training.

I am aware that surveys have been conducted (for example that of Interns Anonymous) which suggest that up to 82% of interns do not earn full-time jobs at a host organisation following a placement. There are undoubtedly some companies that see interns as a short-term alternative to temporary staff, but the results of Interns Anonymous' survey are surely skewed by the fact that the majority of their users are people who have had a negative internship experience. Inspiring Interns' own data shows that 65% of interns become full-time employees at their host organisation and the majority of the remainder go on to secure full-time work elsewhere as a result of their additional experience. Internships, when run properly, do lead to jobs.

If every single internship was subject to NMW there is also a very real danger that their quality would decrease significantly. Currently if you are providing an internship with lunch and travel expenses (the minimum required by Inspiring Interns of their clients), there is a moral imperative to provide interesting work, extra training and structured support. Additionally the placement should be time-limited (we say three months as a maximum). If the intern does not feel their firm are matching these requirements they are free to leave whenever they like. If, however, all interns receive NMW then the scope for exploitation expands enormously. We could see year-long placements paying minimum wage where graduates, rather than learning, are given mundane tasks and become a general office dogsbody – justified by the fact they are being paid. Surely this is counterproductive to social mobility? It is far easier to live for three months on lunch and travel expenses (which are often almost £1000/month) followed by a full graduate wage than it is on less than £12,000/year, a figure below the London Living Wage.

Finally, I note that today's Low Pay Commission Report rejects calls for internships to become an official employment term and part of the NMW legislation. They argue that existing rules are strong enough but need tougher enforcement. This is reasonable, although long-term I still believe more specific internship legislation (such as that for stagiaires in France) is the best solution for all parties. While internships continue to fall under current rules governing payment I call on the Government and HRMC to adopt a sensible approach to enforcement. Punish those who wilfully exploit young workers but do all you can to support those who offer valuable experience and are helping combat the growing unemployment crisis among this nation's youth.