The Ethics of Unpaid Internships

Words by Sam Brown (Milaana Thought Leader)

Note: This ethical exploration was written 15.01.2015 –  Milaana has since closed our operations but this remains a fundamental analysis of the reality of unpaid internships and the need for Mediators like Milaana to create ethical opportunities.


Securing full time employment, once the cornerstone and appeal of an advanced economy, is fast becoming a nostalgic sentiment. It is reminiscent of a period where employment potential was looked upon with a sense of excitement and intrigue for young people ready to embark on the maturing transition from education to employment. That nostalgic period provides a grim contrast with the current global youth unemployment crisis, increasingly competitive labour market and rise of exploitative unpaid internships. Young people transitioning from university to full time employment are facing some unique difficulties relative to previous generations, and as a result that reminiscence of intrigue and excitement surrounding employment prospects can quickly degrade into anxiety and loathing. The perception of difficulty towards successfully obtaining employment is not reflective of characteristics of this particular generation, such as the stereotypes of being lazy and entitled, but as this article will discuss it is a result of global forces outside of this young generations control. Add to that the long term economic and social consequences and the outlook for this generation of youth is cause for concern.

In adapting to the economic forces that have contributed to the global youth unemployment the market has responded by evolving the function of internships, from an optional extra curricular value-adding process, into a necessary step towards gaining meaningful employment. To stand out from the overpopulated and competitive graduate labour market, students have turned to adding work experience gained from internships, more often than not unpaid, to their CV. Transactions of knowledge from mentor to apprentice type of formal arrangement have been around since apprenticeships centuries ago, however the necessary nature of internships in this current economy has opened up the potential for exploitative unpaid internships; arguably a contemporary form of free labour. While students are desperate to differentiate themselves, to gain that sense of future security past generations have enjoyed, some organisations are able to exploit these young hopeful graduates by creating unbalanced and unfair internships that benefit the organisation but do not benefit the student other than providing an additional line on their CV.

Regulation and formal policy addressing the issue of internships has not been able to keep up with the growing trend, and is only recently gaining traction as a social issue. The priority favoring experience over education for employers is also a recent trend, however gaining this experience can and should be achieved in a more productive and constructive way. This report will examine the ethics (or lack thereof) of unpaid internships, and raise the case for intermediaries to step in and provide a framework for facilitating meaningful outcomes between students and organisations in an internship environment.

Part 1: The Context 

Youth Unemployment

The International Labour Organisation (ILO) has deemed the current global unemployment rate as a crisis. Global youth unemployment has risen to 12.6% in 2013, an increase of 1.1% above the pre global financial crisis level in 2007.[1] In Australia it is an even worse outlook, a trend that has become worse after the 2008 global financial crisis, with 15% unemployment for people aged 15-24.[2] After every other economic downturn over recent generations, the youth unemployment rate has generally begun recovering soon after the economic crash, however in our most recent economic downturn in 2008 youth unemployment has only declined further. It is not just the unskilled or unwilling to take part in full time employment that are contributing towards the statistics.

Educated newly graduated youth are making up a large proportion of that youth unemployment statistic. 10.6% of bachelor degree graduates in Australia were not working and still looking for full time employment 4 months after completing their studies, which is up from 8.6% in 2012.[3] Only 71.3% of Australian bachelor degree graduates were in full time employment within four months of completing their degrees, down from 76.1% in 2012.[4] The proportion of graduates available for full time employment fell between 2011 and 2013, from 64.8% to 61.6%,[5] suggesting that there is a growing trend of graduate students seeking alternatives to full time employment such as continuing postgraduate study, or finding internships.

Part-time employment as an alternative to full-time employment is also on the rise, as statistics show that 18.1% of recent graduates in 2013 were seeking full-time employment and were currently working in part-time employment, up from 15.3% in 2012 and 14.9% in 2012.[6] This statistic coupled with the rising youth and graduate unemployments trends lead to the worrying conclusion that students are seeking alternatives to full time employment, not because they are unwilling but because the opportunities are declining.

With the documented effects of the oversupply of graduate students, the necessity of differentiating from the market to land a full time employment opportunity has increased. Oversupply of graduates correlates with an undersupply of job creation relative to the amount of new graduates entering the market. New job opportunities are therefore becoming more competitive as more students are competing for the same distributive slice of the employment market. Students are undertaking postgraduate studies in unprecedented numbers in an attempt to differentiate themselves, which has resulted in more overqualified students entering the job market and taking positions that would normally be given to undergraduates or school leavers. Additionally to continuing to postpone seeking employment, internships and work experience are alternative differentiation strategies that students are undertaking in an attempt to become employable.

The increased trend of students pursuing this strategy to gaining full time employment and additional credibility is reflected by the additional numbers of student applicants for advertised internship positions. Not only is the competition and amount of students applying for each advertised internship increasing, but some students are even paying for the privilege to work in an internship that are provided by organisations such as Australian Internships. The bottom line; there are not enough internships being created to meet the demands of the increasing graduate population and unemployment.

Due to the lack of internship opportunities presented to students, the current generation of graduates are overqualified in terms of academic results and achievements, but also under qualified in job readiness and workplace adaptability. The current graduate labour marketplace is flooded with students that do not have work experience or ‘real world’ experiences to demonstrate critical employable attributes. Now that potential employers can be more selective when choosing potential graduates, due to the current oversupply of graduates, they are choosing the students who will take less time to adapt to their workplace; an attribute that is usually only proven through life or work experience. That is one of Milaana’s core missions; to provide and empower more students with the potential to gain these work and life experiences.

Employers are increasingly selective about students who can demonstrate life and work skills, something which the structured transitional education Milaana aims to facilitate. The internship programs provided by organisations that work with Milaana are structured in such a way that they can provide both work experience and life experience. These programs are more than an internship, they are life and work enhancing platforms which aim to endow confidence, social connections, capability and community spirit onto the participating students. This will not only give the students greater employability chances, it will make them more complete and experienced individuals capable of generating their own initiatives, raising their awareness for alternative socially orientated career paths and creating new perspectives to mould these students into future leaders.

The students do not just gain a competitive edge over the large pool of graduates, they begin to set a standard and precedent for a more well rounded, capable and socially orientated practice. If these students begin to achieve comparative success against their peers, social responsibility would become a normative tertiary educational value. The minimum standard for educational institutions, would be to implement similar programs for their students to become employable so that the educational institutions remain successful by providing competitive graduates.

Part 2: Ethics and the Scarring Effects of Unpaid Internships

We have discussed the growing practice of internships in Australia as a means for students to differentiate and create better employment prospects for themselves, and some of the economic supply and demand disparities faced in the internship industry. This is only one side of the story, the rational and economic sense of the problem perceived as addressing youth unemployment by generating more capable work ready graduates. This next section will explore the practice of unpaid internships as a growing concern from a social and cultural perspective, aiming to provide the social implications of the growing internship culture and the ethics and morality surrounding current practice.

Societal Implications of Unpaid Internships

We have discussed the growing practice of internships in Australia as a means for students to differentiate and create better employment prospects for themselves, and some of the economic supply and demand disparities faced in the internship industry. This is only one side of the story, the rational and economic sense of the problem perceived as addressing youth unemployment by generating more capable work ready graduates. This next section will explore the practice of unpaid internships as a growing concern from a social and cultural perspective, aiming to provide the social implications of the growing internship culture and the ethics and morality surrounding current practice.

The general impression amongst ambitious and forward thinking graduates is that internships are a necessary step during a summer or winter break, and even during or after completing studies to gaining employability. There is also a general impression that students are one of the most fiscally sensitive demographic within Australia. Many students also need to use the time they are not studying to gain casual or part time employment to supplement themselves financially. Students have varying degrees of financial responsibilities, financial support and capacity during their study period. However every student leaves university with the same piece of paper, leaving each student, regardless of their financial capacity, in the same graduate market on completion of their degree. It is their extra curricular experiences external to university coursework which set them apart, and unfortunately for the students who are less financially entitled, it is comparitvely more difficult to compete with the more socially and financially supported peers.

Those students without the nepotism to grant them considerably more competitive and recognised internship positions are at a great disadvantage in the graduate market. Students with greater financial capacity are afforded the liberty to take unpaid internships during breaks and down time, when other students with greater financial responsibility or less support are less at liberty to work for free. While it is possible for some students to study, earn money and fulfill an internship at the same time, the demands on the student are enormous and it is unreasonable to believe that the student with so much on their plate would be able to prioritise each activity as highly as their peers who have more liberty to spend on each activity. This creates a larger gulf between those students with entitlement and those students without, fostering a greater sense of inequality and caste amongst students.

When greater inequality is imposed onto employment opportunity, this has larger social implications for a society built on a foundation of equal opportunity. Ultimately the issue with internships is that they are an expensive luxury, a luxury which due to unpaid internships becoming firmly entrenched as graduate culture, is a necessity to gaining employment which is much more accessible to students with financial support and nepotistic network effects than without.

Additionally to increasing the gulf of inequality between the rich and poor, the current youth unemployment problem and unregulated unpaid internships has long term scarring effects on the youth of today. Similarly to the social and psychological problems faced with unemployment, students embarking on non fulfilling unpaid internships, experience a sense of helplessness as work is a large component of how individuals define themselves. If students are not reimbursed in any sense of quid pro quo or through a sense of achievement and recognition, then working for free will eventually be reflected and affect their own sense of value and set a precedent of long term undervaluing their contribution towards society which leads to setting a very low relative standard in future employment. Students who believe they have no self worth lack the confidence and self image to reach their full potential. Milaana focusers on creating internship positions which support students and facilitate a sense of worth and confidence.

The Ethics of Internships: Exploitative or Productive?

Internships are unregulated, and unregulated products or services are much more prone to being subject to exploitative practice, which needs to be taken into account when discussing the ethics of internships. For students completing an internship there is huge potential for value adding experiences including workplace skills, applied learning, social value, initiative and valuable referees. To become more employable in the labour market, a graduate undertaking an internship needs to be able to prove that they have fulfilled the requirements of the program which is normally done by their internship provider giving a positive reference to future employers. The focus is then placed by some students on the perceived tangible outcomes of the internship, the reference at the end. The common unfortunate consequence of this focus is that students and internship providers forget that the substance of the internship position should be more valuable to the student than the reference. It is a misconception where the priorities between the means and the end have inverted, where the end of an internship and its reference is of greater value than the means of actual content learnt. This inversion is attributed to the motivation for pursuing an internship in the first place; to gain a reference to increase employability. Students go into an internship thinking all they will get out of it is a reference. As a result, internship providers reciprocate the gesture of giving the student the reference without any regard to the content, which usually means that students are given tasks such as getting coffee and running errands. This does not necessarily seem exploitative, as both the student and the internship provider are consenting and providing what is expected of each other. Taken out of the context of the graduate cultural expectations though, and we start to see a much more exploitative and ominous trend.

Internships are a new feature of our graduate economy. Historically and traditionally internships were formally known as either apprenticeships or work experience. Earlier forms of internships can be traced back to centuries ago, for example blacksmith apprenticeships where apprentices were taught valuable skills while also receiving shelter and food in return for their labour. This transaction was quid pro quo, value exchanged for value. Then there are modern forms of work experiences such as those provided by education institutions, like work placement sessions which focus on the student learning and gaining valuable employment related skills. The common thread in common between these constructive teaching practices that have been in place over countless generations, is that the student receives some value from the experience in of itself. Using this sense of quid pro quo transaction between student and mentor and contrasting that with current forms of unpaid internships, we have found the core problem with unpaid internships; the value is misplaced from the essence of learning to utility. The current graduate culture of unpaid internships is more likened to unpaid labour since the focus is on utility and commodification of the student rather than the learning process.

When are Unpaid Internships okay?

According to the Fair Work Ombudsman, unpaid internships are okay as long as the intern is not in an employment relationship. Employment relationships require that a minimum wage be offered, the national employment standards be adhered to as well as any other applicable award or registered agreement. Differentiating between an employment relationship and an unpaid internship generally depends on the focus of the program; does it benefit the intern or the employer. If the intern is doing work that would normally be fulfilled by paid employers, or if the intern is expected to contribute to value adding processes to the business then the intern is more likely to be considered as being in an employment relationship.

Milaana approaches the focus of an internship in the same vain; internships need to focus on endowing the student with meaningful experiences. Milaana believes that an internship is okay when the intent and value of the role has the same character as volunteering. Volunteering is the process of contributing some form of constructive value to the world through time and effort which as a process in and of itself endows a volunteer with positive consequences, fostering a sense of good will, responsibility and achievement. Volunteers are paid for their time by learning essential tangible skills and workplace habits as well as gaining the invaluable and often underrated intangible sense of contribution. It could be argued that in an economic sense, contributing financial value to a business can also be considered as a value adding process in the world. Often though, economic value generated by a business is distributed between specific individuals and share holders for their own gain rather than directly to the social good. In those cases where a volunteer is generating value for a business they are generating value for individuals who are profiting from their time and effort and not offering any reimbursement in the case of an unpaid internship. It is in defining a successful internship, as a volunteering experience towards a social project or goal, where the definition of an acceptable internship differ between a traditional sense and Milaana’s vision.

To make certain that the essence of a volunteer agreement is fulfilled, Milaana has a standard that needs to be upheld by an organisation taking interns to deem the practice as acceptable and productive. These include, structured and supportive internship programs with a focus on the students learning and engagement over their contribution towards the organisation, in an environment that appeals to the volunteers sense of social good so that they are passionate and motivated to contribute, and better rewarded by contributing towards a cause related to their sense of agency. By structuring internships in such a manner, it is more likely that the process will be valued for what it gives to the student as a means to contributing and learning rather than, as previously discussed, a reference on their job applications.

In line with the culture of learning, the value and acceptable guidelines for an internship should be measured based on what it gives to the intern immediately as a learning process rather than dependent on future outcomes for the student. That does not mean the future and career opportunity creation are not significant value to an internship, just that it should not be the focus.

Part 3: The Solution

Developing Institutional Frameworks

The problem of quantifiably understanding how internship creation is responding to the oversupply of students, is that there is an insufficient amount of data around internships. This is due to the unregulated nature of internships; there are currently no formal processes for contracting interns or the procurement process of their unpaid employment. Therefore there are no institutional bodies that can organise and analyse the creation of new internship positions, and whether the amount of new internships are adequately adapting to the increased intake of new students and unemployment figures. This calls for the need of an intermediary or institution to step in and provide a platform for regulating and analysing internship trends. While social enterprise cannot directly influence the legality framework of an industry, the precedence set by social enterprise such as Milaana in the internship industry can raise awareness and set the standard which can inform policy makers and regulatory decisions. Additionally, social awareness and the public’s perception towards internship practice needs to be adequately informed so that social discussion and discourse can also shape policy and regulation.

With increased awareness and capacity for social, legislative and judicial discourse surrounding internships, the aim is to eventually have an internship regulatory framework that can adequately respond to and reflect market conditions based on relevant quantitative data and constructive social values. Milaana is committed to setting the standard for a constructive and meaningful approach to what internships should be, and to lead the way for future discourse to encourage meaningful and sustainable practice.

Milaana’s Role

This report has outlined the core issues related to unpaid internships; youth unemployment, social inequality, exploitation and unregulated practices. Milaana’s vision is to empower youth so that these issues related to unpaid internships can be resolved. As an intermediary between students and organisations taking on interns, Milaana has a great responsibility and capacity to begin to address these issues. Youth unemployment is at a critical level, and by providing students with access to programs that are designed to not only act as an internship but also give them the confidence, ability, opportunity and knowledge. With this Milaana hopes to unleash the next generation of change makers that can create additional employment opportunities for themselves and others as alternative pathways to the traditional overburdened graduate employment market.

The internships are structured to have social impact and community benefit, which additional to the social cause being contributed to, the student also gains a sense of confidence and giving back to society by being given the chance to fulfil altruistic action of something that they are passionate about. Controversially altruism and philanthropy are becoming more of a luxury to pursue, as making ends meet is challenging enough for the lower end of the economic spectrum let alone pursuing altruistic action. Creating additional internship opportunities by being a facilitator between students and organisations alleviates some of the nepotism and income inequality surrounding internship engagement. Some organisations do not know how to engage students effectively, so providing a constructive framework also allows additional organisations the opportunity to create internship positions, effectively increasing the amount of internship positions available in the market. The exploitative nature of some of these unpaid internships is reduced by the influence Milaana hopes to achieve by leading the way for potential discourse and providing a framework for a standardised internship process. Regulatory and institutional influences which Milaana hope to contribute towards aim to alleviate the exploitative nature of some of the current practice. This alone is not enough.

Students need more than just the internships that Milaana can create. A comprehensive and collaborative approach needs to be undertaken to help our students develop throughout their education in rounded and equipped community leaders. More programs are needed IN universities that help to build the confidence and networks of students and we need to collaborate with all those who are creating opportunities for students. You cannot and should not have a monopoly on ‘opportunity creation’ and we can all collaborate to achieve our shared purpose of empowering youth. Milaana currently provides a niche intermediary for internships in project based opportunities that benefit the community and work with non profits, social enterprise, government and socially responsible businesses. However the objective is to have additional intermediaries in other industries follow a similar socially responsible approach to the internship experience. Milaana hopes that by providing quality opportunities for youth that tangibly empower them through increasing their job readiness and community engagement, that this will become the precedent internship practice that leads the way to a more productive and socially orientated practice.


[1] International Labour Organisation, ‘2014 Global Employment Trends Report’ Jan 2014.

[2] Labour Force Australia,Cat 6202.0, Tables 1,13, and 17, Jan 2014.

[3] Graduate Careers Australia, ‘Annual Graduate Survey’ 2013.

[4] ibid. [5] ibid. [6] ibid.

For more information on unpaid internships and the latest in youth advocacy around this issue – visit Interns Australia

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