Political and corporate internships

I wonder how many school and college leavers are aware of the taxpayer-funded site W4MPJobs. I wonder how many school and college leavers could afford to do any of the unpaid “internships” that are advertised on that site.

I’ll declare an interest. This is one of the sites that I’m looking at as I seek something productive to help pay my way – whether part-time or full time. So what’s the bee in my bonnet? Well, there are a few things.

The Westminster Bubble

I’ve blogged about this previously and don’t intend to repeat it all here. There are the huge diversity and accessibility issues that all of these unpaid internships create. In an era where far more people are going to university, employers are (understandably) asking more than just a degree. Going through the various job sites the number of vacancies asking for ‘experienced graduates’ must be depressing enough for those that have just graduated. Gaining that experience – both ‘on paper’ (to put on a CV) and also demonstrating an understanding of how that sector, the people and the institutions function inevitably put those who (or whose families) can afford to fund unpaid internships ahead of those who have to work long hours on low pay in far “less glamorous” (but by no means less important) jobs.

When it comes to that competency-based interview, what hope does the candidate from an economically deprived part of the country, first from their family to go to university and who had to work every other working hour to fund themselves have, against the privately-educated Russell Group graduate who has had all the internships and connections money can buy? The former is far less likely to have had the chance to have demonstrated the competencies required for the extremely competitive fully-paid graduate posts.

There are a few small programmes trying to stem the tide with reasonably remunerated paid internships – such as the Civil Service Diversity Internships and the Windsor Fellowship. In my final year in the civil service we had two interns in my directorate who had joined for the summer on one such accessibility scheme. Mindful of the sorts of experiences the competition they were going to face (in part due to my experience of the Fast Stream Assessment Centre), I took time out to take them through some of the essentials of project, programme and risk management. The nature of structured application forms in part is trying to ensure as many of the ‘key words’ are in there. The other exercise I got them to do was to replicate something I had been asked to do by my own bosses – in this case examining a series of documents against a set of criteria, setting out an argument and making a clear recommendation – making clear that the recommendation they made may well be one that we would go with.

They said that seeing their recommendation taken on board and followed through made a real difference because as well as learning, it demonstrated to them that their input was worthwhile. Their time in my team I hope gave them strong enough examples from which to draw upon in their future careers.

The thing is, laudable as these programmes are, they don’t deal with the fundamental imbalance between the haves and the have-nots. The fully-funded programmes are on such a small scale that their impact is going to be limited. It doesn’t create that level playing field. Having the handful of fully-funded programmes (which require a huge amount of hoops to jump through – having applied for some during my university days) cannot compensate for all of those unpaid/off the record internships that go to people from affluent backgrounds. Part of me wants to compare it to the tax-evading millionaire who says that his charitable donations even things out. (But I know I’ll get flamed for it).

Market failure

One of the things that I flummoxed my former economics professors with after my finals were over was the relationship between firms and regulators. My premise was that it was in the interest of the market – and regulators – to ensure that the costs of production/provision of services were fully reflected in the price. i.e. all of these costs needed to be ‘internalised’. I also said that it was in the interest of the individual firm to ‘externalise’ as many of the costs of production as possible – whether it was labour market costs (suppressing wages to such an extent that employees needed some sort of state-funded income support to help them pay their way in life) to not cleaning up pollution caused by the economic activity. With the conflict between the firm and the regulator – and the politicians that the latter are accountable to, I said that there was a clear conflict of interest as far as business donations to political parties were concerned, simply because firms would be looking for returns on their donations that would allow them to increase their profits through ‘business-friendly’ policies.

Now let’s move over to unpaid internships. My contention is that long-term unpaid internships are a subsidy to the hiring firm. The balance sways from being one where the intern is genuinely learning something new to the firm getting free labour that it does not have to pay for. Thus the firm has externalised its costs. The reason why I state it is a market failure is because without that element of unpaid work, such firms would not be able to deliver the output that they currently deliver. Ditto with paying people at the bottom end of the market pitifully low wages. If parents, family or the state have to step in to ensure that such people can survive and get buy, then that for me is a market failure because someone else is having to subsidise the costs of production that really should be covered by the firm. If the firm cannot afford this then should the firm be in business? If the issue is one of stupidly high living costs (e.g. due to housing, food, fuel etc) then that is an issue for the economy as a whole and one where the government needs to step in. This is because it is an issue that affects everyone, not just one firm.

The issue of unpaid internships is an issue has been around for some time with organisations like GraduateFog raising the profile. Media, fashion and advertising are known to be some of the worst offenders, with HMRC finally looking into this.

It’s not just firms that are benefiting from long term unpaid internships. We have seen the problem in the form of unpaid internships with MPs – 260 of which were advertised since the last general election. Thus our entire system of parliamentary politics is being subsidised by a small number of families (who then get the experience and access not available to anyone else) resulting in a much narrower field of support for MPs. As I made clear in my blogpost The impact and influence of select committees, I think that MPs and the institutions of Parliament need to have far more, not far fewer resources - commensurate to the organisations and institutions that they have to scrutinise. This means having far greater numbers of staff (perhaps employed directly by Parliament in the same manner that civil servants work for ministers) and ensuring that those members of staff are paid a reasonable salary.

This in part feeds into the problem of living costs in London. Unless the costs of housing, transport and living are tackled, the prospect of MPs getting greater levels of resource – in particular given that the Prime Minister wants to ‘reduce the costs of politics‘ – looks remote. But until MPs are properly resourced to carry out their constitutional duties of holding the powerful to account, there will always be the temptation to resource their offices through unpaid internships.

As for corporate internships, this is something where the enforcement of minimum wage legislation needs to be enforced far more strongly than of late, and one where the Government needs to issue clear guidance on what constitutes an ‘internship’ and what does not. This will then make clear to firms what is and what is not acceptable (as well as giving the courts something to work with where there are points of contention in the cases of prosecution). If that does not do the trick, then the Government I think may need to consider bringing in new laws both to stop the abuse of young people in particular, and to correct a clear market failure.

This entry was posted in Business economics and finance, Employment and job hunting, Public administration & policy. Bookmark the permalink.

6 Responses to Political and corporate internships

  1. As laudable as the civil service diversity internships are they are not much use for someone like myself – white, male, two parents earning a slightly above average wage neither of whom work in the ‘professions’. Having just failed the Fast Stream (success rate c. 1%) it feels like this is something impossible to break into…

    As for internships, at careers talks at my University put on they have no answer for ‘I can’t afford to do the things on W4MP’!

  2. I believe this is the best blog post you’ve done for as long as I’ve been following you – thank you.

  3. Andrew Bower says:

    In business settings it is far from certain that an intern will add value. They may do so but it is equally likely that they will be a net drain on the business (paid or unpaid) but something that business wishes to undertake regardless. I don’t think you’ve factored in this possibility at all. Of course in Westminster world they probably genuinely are helping, but then again, that’s the ‘bubble’ talking, isn’t it?

  4. botzarelli says:

    But why is there such a need these days for internships and work experience? They were certainly far less essential when I graduated into the last big recession in 1993. I think it is because there is too little left upon which candidates can be differentiated in applying for work that leads to a career.

    In the past a large proportion of intelligent and motivated young people would have left school or college at 16 or 18 to find work. It was not always easy to find work but it was at least normal for there to be “proper” jobs for people who had a handful of GCSEs at around C grade or a couple of low grades at A level (or equivalent) who knew that they weren’t interested in studying for a degree but that this did not make them dimwits to be left behind. Even those who had left school with no qualifications could decide to take a few key GCSEs to provide them with a step up from unskilled labour.

    Now, almost all of the equivalents of the groups described above will be strongly urged to stay in full time education to 21, taking on large debts and graduating with degrees that, once you filter out the top institutions (which have stayed relatively stable in size and so account for a roughly similar slice of the population they did 20 years ago) are largely indistinct in quality and value. So, they end up being of only negative value in keeping those who are not graduates firmly away from the chance of decent jobs that a generation previously they might have been able to get however bright and interested they might be. In this environment, internships and other things that allow you to demonstrate your ability have become essential because qualifications no longer do that. This has also made it hard for those who have got degrees from the more competitive institutions because they will be competing against others who might have better work experience.

    Short of providing serious and reasonably paid work experience to all who want it, measures to make work experience more accessible to those of limited means are a drop in the ocean.

    http://botzarelli.wordpress.com/2011/02/01/are-the-posh-back-in-charg/

  5. Pingback: “You don’t need a degree to be a receptionist” | A dragon's best friend

  6. Julian says:

    I totally agree with the way that internships distort access to opportunity and aspiration. I run a small media production company and we have always had a policy that people should get paid for the work that they do and so have never taken on internships unless they are tied to a college course. Another problem arises when competitor organisations have no qualms in exploiting a readily accessible and willing resource thus reducing costs and maximising profit.

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