Unpaid and Underpaid Internships

Internships have grown to become a crucial part of the graduate job market. Offering graduates an invaluable opportunity to gain hands-on experience, develop key skills, and build their networks, they can be formative experiences for those trying to kickstart their career.

But our previous research has highlighted a persistent and pervasive problem with internships – many of them are paid below the minimum wage, only offer expenses or are entirely unpaid. Rather than offering a helping hand, this type of practice is acting as a major barrier to social mobility and fair access to competitive professions for many young people.

With the Government soon expected to announce tighter controls on unpaid work, this report provides an updated picture of the graduate internship market. Surveying both graduates and employers, it takes a renewed look at graduate internship opportunities, pay and access, discussing what can be done to ensure that internships routes are open to all.

1 in 2

recent graduates reported undertaking an internship.

61%

of internships undertaken by recent graduates were unpaid or underpaid.

40%

of recent graduates who did an unpaid internship received financial support from parents.

Key Findings

Internships are a growing route into careers. More than half of graduates (51%) report completing at least one, up 12 percentage points since 2018.
59% of employers report offering internships, up from 48% in 2018. In London it is 80%.
While more internships are paid the National Minimum Wage (37% compared to 27% in 2018), the proportion paid, but less than the NMW, has also risen from 9% to 23%. Around 1 in 5 internships offer no financial compensation at all.
35% of graduates overall have completed an ‘unpaid or underpaid’ internship (i.e. not paid the minimum wage), up from 27% in 2018.
Graduates from working-class backgrounds are much less likely to undertake an internship than middle-class, and the gap has widened since 2018 from 12 percentage points to 20. Higher social capital through networks is also associated with participation.
40% of unpaid interns rely on the ‘Bank of Mum and Dad’ to fund their role, up from 26% in 2018.
Just 1 in 10 internships was found through an open advertisement.
Employers and graduates want reform. Just 20% of employers want the status quo to continue and almost 40% say they want unpaid placements explicitly banned. Three quarters of employers offering internships say banning unpaid internships would not negatively impact the number of opportunities they provide.

Recommendations

Unpaid internships over four weeks in length should be outright banned, alongside better enforcement of current minimum wage legislation. The Government should deliver on its ‘Make Work Pay’ plan, with the law changed to make explicit that all internships longer than four weeks should be paid at least the National Minimum Wage, with exceptions for placements taken as part of education. Tightening the law will increase clarity for both young people and employers.
HMRC should promote information on internships and the national minimum wage to all employers, and conduct an information campaign to inform young people of their rights. Over recent years, employers have continued to offer unpaid and underpaid internships despite existing legislation making many of these placements likely illegal. All employers, along with young people, should be made aware of workers’ rights in this area.
Irrespective of legal changes, employers should take seriously their responsibility to pay interns who are not simply doing work shadowing. Unpaid internships exclude many young people without financial support from relatives, and employers should take advantage of widening the talent pool in their hiring practices. To open up access to internship opportunities, interns should be paid at least the National Minimum Wage, but preferably the Living Wage.
Internship positions should be publicly advertised so all young people can find and apply for opportunities. Many internships are never advertised, and instead offered through informal networks, to friends or family of staff or clients. This practice locks out talented young people without connections.
Recruitment processes should be fair, transparent and based on merit. As well as being openly advertised, the process by which potential candidates are selected for internships should be fair and transparent – upholding the same standards of recruitment as other jobs.

Unpaid and Underpaid Internships

Key Findings

Recommendations

Related Research

Pay As You Go?

Unpaid, Unadvertised, Unfair

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