Pay to work and cheap interns future for young workers

During the 40-or so months since the crash of 2008 a new wave of caring, sharing philanthropy has risen slowly to the surface, culminating in the Bellagio “summit” now under way on Lake Como.

The summit’s origins are traceable back to Standard Oil’s profits in the 19th century, so it’s hardly a new idea. But it seems it’s time has come, at least for those extremely rich entrepreneurs trying big time to salve their consciences, and save their skins whilst finding a new way forward for the capitalist system.

Bill Gates, the one individual with the highest public profile, made his mark with his wife by establishing the Bill and Melissa Gates Foundation, and in 2010 launchin “the Giving Pledge”. This encourages the world’s richest to give much of their accumulated wealth to good causes. And it’s all of a piece with the turn to self-reliant, “resilient” communities.

Their good work is clearly a big part of the inspiration behind the Big Society of David Cameron (who yesterday refuted the idea put to him by a parliamentary committee that the occupation of St Paul’s was an example of communities taking on more responsibility).

As economic growth gives way to contraction and austerity bites, the softer edge of services that can no longer be afforded like libraries, luncheon clubs for the elderly and infirm, rural shops and post offices, are being offered to those that value them to run them for nothing as the charitable acts of philanthropic volunteers.

But with the crisis biting ever harder, things are moving on apace. Capitalist society is at the crossroads. Not only are (some of) the already rich giving away their money (well, at least some of it), but those who are still hoping to get rich are breaking the wage labour contract or inverting the direction of value that traverses it.

For some years, young people have been first encouraged, then more or less obliged to seek “work experience”, either unpaid or at the minimum wage, in order to make themselves attractive in the jobs market.

More recently the Coalition has been promoting the wider use of internships as part of its drive to improve social mobility, but government lawyers have warned that growing numbers of companies may be breaking the law, turning to interns to carry out work that lasts far longer than traditional work experience placements, yet refusing to pay them.

Entrepreneurs have seized upon young workers as a source of low cost and enthusiastic labour. Steve Lowy, founder of three-star hotel brand Umi, has used 100 interns since he set up his business in 2007, from one week slots for GCSE pupils on work experience to year-long placements for hospitality students.

Of the arts internships advertised on the Department for Business Innovation and Skills-sponsored website, 92% were unpaid. Almost 80% of advertised fashion internships were unpaid, and 76% of PR internships were unpaid. Half of the media internships were unpaid.

According to Chartered Institute of Personnel figures, there are between 50,000 and 70,000 internships a year. Between 10,000 and 15,000 of these are unpaid. And in the largest online UK internship survey to date, carried out by Interns Anonymous, out of 594 respondents 87% said they were paid below the national minimum wage.

And now it’s becoming a case of pay to work. Selling internships has become a business in itself. The Tories auctioned off internships at City hedge funds at its Black and White ball in February to raise thousands of pounds for party coffers. Start-up company Etsio has made selling internships its business model. They charge interns up to £100 a day to get work experience in small, specialised businesses.

Nice work if your parents can pay to get it.

Gerry Gold

Economics editor