I get very crabby sometimes. I don't actually like it; it usually means that something has prodded an existing sore spot.
A case in point was the release during the week by the Australian Fair Work Ombudsman of a report into unpaid work. This ABC news report, Fair Work launches crackdown on unpaid work, will give you something of the flavour. It begins:
Unpaid job trials and internships are on the rise in Australia, with young graduates at particular risk of being exploited, according to new research.
The internships, which are common in the United States, have become increasingly popular in Australia but a new report out today says the arrangements are illegal.
Early in 2011, eldest studied at the Copenhagen Business School for a semester as part of her university course. While there, she did an unpaid internship with the Australian Embassy. This was not connected with her course, but was very valuable in giving her experience. Apparently, this type of arrangement is now illegal. Listening to the Fair Work Ombudsman Nicholas Wilson being interviewed about the report and the proposed follow up action made me wonder just what planet he lived on. Yes, I said that I got crabby if you poked a sore spot!
Yes, there has been a rise in unpaid work and that can lead to exploitation. However, the response is unreasonable. Here I want to focus especially on the professions, the area that I know best. Here I quote from the official summary of the report:
- While unpaid internships are more prevalent in certain industries, the report concludes that the majority of professional industries are affected, including (but not limited to) print and broadcast media, legal services, advertising, marketing, PR and event management. Such arrangements are often considered a prelude to paid work.
- The report concludes that there is reason to suspect that a growing number of businesses are choosing to engage unpaid interns to perform work that might otherwise be done by paid employees.
- The report recommends that FWO focus on those businesses that are systematically using unpaid work arrangements to exploit workers, and gain competitive advantage over businesses complying with workplace laws.
Let's start with a basic fact. There are costs involved with all new staff members beyond salary. These include especially supervision time. It also takes time for a new staff member without experience to become productive. This is especially true for a new graduate.
Consider now a second feature. There are costs involved in working. You have travel costs, depending on the industry you have to look smart and that means dry cleaning; these may sound small things, but they add up.
Taken together, these things impose a natural constraint on the use of unpaid staff. They can only do certain things, there are costs involved for the business, and they will walk when they can't afford cash costs associated with the job or if they feel that they are being ripped off. With possible exceptions, events management or certain not for profits come to mind, you can't build a sustainable business or even increase your profit margins through systematic use of unpaid labour. The real world doesn't work like that.
You can actually see this in the difficulties that can arise in finding placements for students at all levels who have to do work experience as part of their course. They can struggle to find the placements they need. Why? It's all to expensive and complicated for the firms they want to work for. I remember at one point I was getting a dozen applications a week, including many from students at overseas universities, especially from those in France.
Turning to the other side, the labour market is both imperfect and very competitive. I have written a little on this and should write more. I worry a about my daughters, for they live in a credentialed world in which just just having a degree no longer guarantees work. For many, internships or unpaid work has become an investment in training and work experience.
The Fair Work Ombudsmen's blunt edge approach does not recognise any of this. As I said, the report prodded a sore spot. It just adds to the regulation that is choking us all. Mr Wilson need a reality check.