Britain promised to ban unpaid internships and has just thought better of it. The evidence says free labour buys almost no advantage at all.
Jonathan Reynolds, then Britain’s business secretary, launched a call for evidence on unpaid internships in July 2025, asking how firms used the placements to size up candidates. It closed in October. No British law bans the practice outright. An intern who counts as a ‘worker’ is already owed the minimum wage, but no statute defines an intern, and employers have worked the gap for years. Labour promised an explicit ban before winning an election in 2024. The answer arrived in February without one: guidance, an awareness campaign and enforcement through the Fair Work Agency, which opened in April. Nick Harrison, chief executive of the Sutton Trust, a social-mobility charity, said the system was simply not working. His researchers had found that 35 per cent of graduates completed an unpaid or underpaid placement, against 27 per cent in 2018.
Shawn VanDerziel, who runs America’s National Association of Colleges and Employers (NACE), put his organisation behind a campaign called ‘Unpaid Is Unfair’ in September 2023. Its student survey found that paid interns averaged 1.61 job offers on graduating. Unpaid interns averaged 0.94. Students who had done no internship at all averaged 0.77. The gap between a summer of free labour and a summer of nothing came to 0.17 of a job offer. Median starting salaries ran to 62,500 US dollars for the paid and 42,500 for the unpaid. The surveys traced where the hours went: paid interns spent 42 per cent of their time on analysis and project management, unpaid interns 30 per cent of theirs on clerical work.
Rebecca Montacute, a research fellow at the Sutton Trust, priced it in 2018. An unpaid internship in London cost 1,019 pounds a month to survive, or 827 UK pounds in Manchester. Public First polled recent graduates for the charity in December 2024: 55 per cent of middle-class respondents had done an internship, against 36 per cent from working-class homes. The gap had widened from 12 percentage points to 20 in six years. Among the privately educated the rate reached 71 per cent. Two-fifths of unpaid interns drew on the bank of mum and dad, up from a quarter.
Harrison put the employers’ own evidence to ministers in February. YouGov had surveyed 1,009 senior HR decision-makers for the Sutton Trust in December 2024. Three-quarters of those offering internships said a ban on unpaid ones would not reduce the number of places they offered. Only 20 per cent wanted things left alone; 38 per cent wanted an outright ban, and a further 30 per cent wanted the existing minimum-wage law enforced.
Chaynesse Khirouni, a Socialist deputy, gave her name to a French law passed in 2014 that made payment compulsory beyond two months, capped placements at six months, and limited interns to 15 per cent of a firm’s headcount. The rate now stands at 4.50 euros an hour. Senators complained within the year that long placements were drying up. The government replied in 2015 that no figures existed to show it. DARES, the labour ministry’s statistical arm, later recorded entries into internships rising four per cent in each of 2018 and 2019.
Andrea Nahles, Germany’s labour minister, swept interns of more than three months into her country’s first statutory minimum wage in 2015. Eight years on, 90 per cent of German respondents to a Eurobarometer survey had done at least one traineeship, the highest share in the EU.
Nicolas Schmit, then the European commissioner for jobs, published a draft traineeships directive in March 2024, aimed at employment dressed up as training. Ministers agreed a position in June 2025 only after stripping labour-market activation schemes out of its scope. Alicia Homs Ginel, a Spanish socialist and the Parliament’s rapporteur, won a broader mandate last October covering every placement bar those taken for academic credit. Trilogues opened in November. The Cypriot presidency shifted the third round from March to May, and Téa Jarc of the European Trade Union Confederation warned the file risked being forgotten. BusinessEurope wants it withdrawn. Of the 3.1 million trainees the EU counted in 2019, nearly half went unpaid.
‘Recruit once, hire twice’
Erik Brynjolfsson, Bharat Chandar and Ruyu Chen published a paper in August 2025 drawn from the payroll records of ADP, America’s largest payroll processor, and returned in February with an update answering their critics. Workers aged 22 to 25 in the occupations most exposed to artificial intelligence had seen employment fall 13 per cent relative to everyone else. Older staff in the same jobs were untouched. Employed software developers in that age bracket were down by a fifth since late 2022. Drexel University’s hiring outlook for 2026 found close to a fifth of firms planning to take fewer interns, or none.
Stephen Isherwood, joint chief executive of the Institute of Student Employers, reported in October 2025 that graduate hiring across 155 large British employers had fallen eight per cent while apprentice hiring rose by the same margin. The ratio of graduates to apprentices slipped from 2.3 to one down to 1.8, and is forecast to reach 1.6 next year. Apprentice recruitment has climbed every year since the ISE began counting in 2015. France signed more than 600,000 alternance contracts in 2024.
VanDerziel published NACE’s internship report in April. Employers expect to take 3.9 per cent more interns in 2025-26, after a 3.1 per cent fall the year before, and more than half said they would raise their numbers. Internships, he said, let employers “recruit once, hire twice”. The rate at which interns convert into full-time staff reached a five-year high.
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