Young workers should be paid at least the minimum wage (govt says while encouraging unpaid work experience for 23-year-olds)

14 November 2013

Sarah Glenister, IER Staff

The Department for Business, Innovation and Skills at first appeared to be in a state of ideological confusion this week, as it called for internships to always be paid at least the National Minimum Wage (NMW) while simultaneously encouraging the use of unpaid work experience schemes for people up to the age of 23.

However, closer inspection shows they may not be that serious about ensuring young people are paid anyway.

On Monday (11 November 2013) a statement from BIS announced the release of “new guidance” for employers, which reminds them to pay their workers (just in case they had made the ‘honest mistake’ of forgetting to do so, one presumes).

“By raising awareness of NMW rates and the law, we will make sure people play by the rules and treat their workers fairly,” Employment Relations Minister Jo Swinson said.

Interns can also call the HMRC’s Pay and Work Rights Helpline on 0800 917 2368 to report exploitative practices. Having cut to the bone many enforcement agencies across the UK, the government is now relying on workers to speak out when their employers act illegally. Oddly, the statement neglected to add a link for young workers to the current law on whistleblowing, which they might expect to protect them in the instance that they reported their employer for breaking the law.

Unfortunately for them, the Coalition weakened whistleblowing law as part of the Enterprise and Regulatory Reform Act in the spring, and there are widespread concerns that many workers think the state will offer them more protection than they will receive in practice if they take the brave step of reporting illegal activities at the workplace.

“Not paying the National Minimum Wage is illegal and if an employer breaks the law, government will take tough action,” Ms Swinson vowed, stating that 466 employers have already been fined by the HMRC this year.

HMRC’s Assistant Director of National Minimum Wage Michelle Wyer also warned that employers breaking the law could be issued a penalty, forced to make payments to workers in arrears, be “publicly named and shamed”, or prosecuted.

BIS were less forthcoming about how many employers have actually been prosecuted for breaking NMW law.

“Anyone considered a worker under the law should be paid at least the minimum wage, whether they are an intern, or someone on work experience,” Ms Swinson said, confusingly on the very same day as her colleague Skills and Enterprise Minister Matthew Hancock stated: “Work experience, whether paid or unpaid, can be hugely valuable to young people and evidence shows it works and helps people get jobs.”

Mr Hancock was referring to the government’s Traineeship scheme, which was launched in August 2013 and is targeted at 16 to 23-year-olds.

Eligible participants will work for free for businesses for up to five months, while being assisted with interview preparation, CV writing and “support” to improve their English and maths skills.

At the end of the placement, the government “expects” businesses to provide an interview, though this interview does not need to be for a real job or apprenticeship. Instead an “exit interview” is sufficient to provide “practice” for young people in work skills.

“Worthwhile experience within a business gives young people the helping hand they need to secure employment or an Apprenticeship,” Mr Hancock commented.

The IER asks what is wrong with simply taking young people on in paid apprenticeships with training, rather than asking them to complete unpaid work first for the chance to interview for an apprenticeship that may not even exist.

Of course, employers taking part in the scheme have access to funding for doing so, meaning the taxpayer is now expected to pay employers for taking on an extra worker they don’t even have to pay.

It is also worth considering whether those in unpaid work experience will be counted as “employed” for the benefit of Office for National Statistics and whether the government will thus be seen to be resolving youth unemployment, while simply exploiting the young and giving state money to businesses.