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Unpaid Internships: Should Companies Pay Their Interns?

by Nicholas Borg | 19 Oct. 2022

Internships are often seen as ideal opportunities for individuals and students. However, by definition, interns are 'students' or 'trainees' who work at a trade or occupation to gain experience to complement their studies. It might be confusing for some to understand whether interns should be paid or not. Let’s try to answer these questions.

The Story Behind Internships

Unpaid internships have recently found themselves to be the subject of debate. In 2020, the European Parliament proposed a complete ban on unpaid internships, citing them as "a form of exploitation of young people's work and a violation of their rights." This ban comes in the wake of the COVID-19 pandemic, where the youth unemployment rate experienced a sharp rise of 11%. Furthermore, article 23 of the UN Declaration of Human Rights states that anyone who works has the right to fair remuneration. Thus, if we consider an intern to "work at a trade or occupation ", shouldn't their contribution to the workplace be valuable and subject to fair remuneration?

The Feasibility of Unpaid Internships

Prospective interns fear exploitation when taking up unpaid internships, which are now seen as the norm. In the US alone, 43% of all internships are unpaid. Companies of all sizes who decide not to pay their interns often sell the promise of "working at a brilliant company" that will provide them with "the best experience with great opportunities to learn" instead.

While this may be true, unpaid internships also exclude potential candidates from lower-income families or without family to support them and can't afford to work without pay. Conversely, paying interns would level the playing field and open the door to more people and potential candidates.

Why Not Pay?

The primary argument against paying interns is that employers see internships as a training expense and, as a result, cannot afford both training and compensation. Furthermore, there is no guarantee that the intern, lacking experience, may yield results. Smaller companies do not have the luxury of paying their interns; similarly, not all interns can afford to work for free. It is especially true in countries where students often find themselves crippled by student loans.

They want to find employment in their field of interest instead of taking up odd part-time jobs. Yet, it is not uncommon that interns are taken on board without pay for stretches of 6 weeks or more, only to be replaced by more unpaid interns vying for a potential job offer.

Internship Regulation

What can companies do to draw the line between interns and employees? Some companies create this distinction by reducing the intern's responsibilities. However, giving interns fewer hours and less work not only devalues their duties but will also devalue those roles for entry-level workers who may be on minimum wage. In addition, interns sometimes work like every other employee within the company and share similar working hours and duties with their colleagues. Furthermore, unpaid internships confine companies because they sacrifice long-term development for short-term gain.

The United States Fair Labour Standards Act (FLSA) distinguishes employees and interns based on the primary beneficiary. If the employer is the primary beneficiary of the intern's contributions, the intern is considered an employee and is thus entitled to minimum wage. Some states require unpaid internships, such as affiliation with academic institutions. It can apply to Malta, as students of academic institutions (such as the University of Malta) are considered to be employed as full-time students.

The guidelines propose various criteria, namely that the intern must be aware that they will be uncompensated and that their training is comparable to training received at an educational institution. Furthermore, the intern's work complements (not replaces) existing employees' work while providing beneficial learning.

What About Malta?

Locally, Malta's Employment and Training Services Act states that "a person performing work in any place of work shall be deemed employed or self-employed". In the case of interns, an Internship / Traineeship Regulation was developed to combat the possibility of exploiting the willingness of young people to learn without any prospect of becoming fully established as part of their workforce".

Much like the United States FLSA, the regulations state remuneration is recommended if there is a mutual benefit between the employer and the intern. However, there is no indication of whether these regulations are adhered to, as companies may choose not to register the intern with Jobsplus.

Our Final Thoughts on Unpaid Internships

All in all, an internship's remuneration depends on each case. By the law is recommended that both employer and intern benefit. However, the company might choose not to declare a new intern, thus avoiding paying more. Freshers Weeks and Career Expos should aim towards raising awareness of these regulations. Through more visibility, prospective interns can avoid the exploitation of their labour.

Nicholas Borg is an avid data analyst, focused on bringing value by providing actionable data insights to support better decisions. His interests lie in learning new things and exploring concepts such as astronomy and the human mind.
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