Pay As You Go?

Report Overview

Internships are an increasingly integral part of the graduate job market, yet are characterised by many features that are socially exclusive and afford advantages to those from better off backgrounds, serving as a drag on social mobility. This report uses survey data from thousands of young graduates and employers to paint a detailed picture of graduate internships for the first time.

Authored by the Sutton Trust’s Carl Cullinane and Rebecca Montacute, ‘Pay As You Go?’ builds on the research brief ‘Unpaid Unadvertised Unfair’ published earlier this year. This report analyses graduate internship pay, access and quality, offering recommendations on how we can ensure the best internships are open to all young people, regardless of their background.

46%

Nearly half of graduates under 24 have done an internship.

27%

Over a quarter of graduates have worked as an unpaid intern.

31%

Less than a third of working-class graduates have done an internship.

Key Findings

How common are internships?

39% of graduates in their twenties have done an internship, including almost half (46%) of young graduates under 24. The average intern completes almost 2 internships each (1.8).
Almost half (46%) of employers report offering internships, with large employers twice as likely to offer them as small businesses.

Pay

Of the employers who offer internships, almost half report offering unpaid placements (48%). 27% offer expenses only internships and 12% no pay or expenses whatsoever.
Over a quarter of graduates (27%) have completed an unpaid internship, with 70% of interns completing at least one unpaid. Over half of unpaid internships were over 4 weeks in length (53%). 11% of unpaid internships undertaken were over six months.

Access

43% of middle-class graduates had taken an internship compared to 31% of working-class graduates, and 29% had undertaken unpaid opportunities compared to 23%.
Middle class graduates were more likely to be funded by parents, have savings and use personal connections to obtain internships. Those from working-class backgrounds were more likely to work a paid job to subsidise their internship, and obtain them through an educational institution.

Legality

There is substantial confusion on the law as it applies to unpaid internships. Almost half of graduates (47%) thought unpaid internships were ‘legal in most situations’ or weren’t sure.
When provided with a series of scenarios, around a third of employers didn’t know whether the situation would be legal or not, and up to 50% incorrectly thought a scenario where an intern was being paid under the national minimum wage was legal.

Outcomes

Completing an internship was associated with higher salaries, for both middle and working class graduates. However there is evidence that completing multiple internships can have diminishing returns, and may actually have a negative impact on employment and wages.
While internships were associated with some social mobility relative to their background – 74% of those from working class households showed signs of social mobility after completion – it also served as a mechanism for maintaining class advantage.

In depth: Politics

Almost a third (31%) of staffers working for MPs and Peers in Westminster had worked unpaid. Those working for Labour offices were more likely to be unpaid, 36%, compared to 28% of those working for Conservatives, with younger and less experienced staff also more likely to have worked unpaid.
Just 51% of staffers reported that they had found their current role through a job advertisement. Over a quarter (26%) report having found their role through a personal connection. Conservatives were more likely than Labour to have been offered their post through a personal connection (29% to 20%).

Recommendations

The law should be changed to make explicit that all internships longer than four weeks should be paid at least the National Minimum Wage. There remains significant confusion among employers and interns as to the law as it stands on unpaid internships. To increase clarity, the current law should be tightened to ban unpaid internships over four weeks in length.
Government should promote the Graduate Talent Pool website more widely. Run by the Department for Education, Graduate Talent Pool is a resource for paid opportunities only. Further promotion of the benefits of the portal to businesses, universities and graduates could help to turn it into a central hub for internships and establish good practice on pay and advertising among businesses.
HMRC should extend their information campaign on internships and the national minimum wage to all employers, andconduct an information campaign to inform young people of their rights. Only a small proportion of unpaid internships are advertised, so HMRC’s information campaign as it stands is likely to miss out on the majority of employers offering unpaid opportunities. It should be extended to a much larger group of employers likely to be offering internships, and should be accompanied by a campaign aimed at making young people aware of their rights, specifically as they apply to internships.
The Independent Parliamentary Standards Authority (IPSA) should review their policies on the hiring of internships by MPs and Peers,including considering whether funding levels for Westminster offices need to be increased to ensure that interns are paid, or whether additional ring-fenced funds should be given to MPs to pay interns in their offices. Politics continues to exclude large swathes of the population. All internships in parliament should be paid, so that a more diverse range of people have access to the experience and contacts such work provides. Alternative routes into parliament, such as the Speaker’s Parliamentary Placement Scheme and parliamentary apprenticeships should be supported and expanded, as long as they are of good quality.

Recommendations for employers/other bodies

Irrespective of changes to legislation, employers should pay interns at least the National Minimum Wage.Unpaid internships exclude many young people, 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 (£7.05 per hour for 21-24 year olds, or £7.50 for over 25s). Preferably, interns should be paid the Living Wage of £9 per hour (or the London Living Wage, £10.55, in London).
Internship positions should be advertised publicly, rather than being filled informally. Large numbers of internships are never advertised, and instead offered through informal networks, to friends or family of staff. This practice locks out talented young people without connections, limiting their opportunities and hampering their social mobility. Internships should be advertised publicly, so that regardless of connections, all potential applicants can apply.
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. All internships should be awarded on merit to the best candidate, not based on personal connections.
Employers should adopt the following five indicators of good quality internships. Employers should work towards improving the quality of training offered in their internships by implementing the five indicators. Interns should have:
1. - Adequate training and monitoring
  - On the job rotation
  - A designated workplace mentor/supervisor
  - A workplace learning plan
  - Post-internship follow-up

Universities should step up internship programmes. Universities are increasingly connecting young people with work placements. However,this could be stepped up and offered more consistently across universities and departments. Only internships that are paid the minimum wage should be advertised and young people should be signposted to information about their rights. Those from less well-off backgrounds in particular should be prioritised.

Report Overview

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