The internship pay issue is making its rounds in social media. Our own intern at IM Possible Solutions, Nurul Rifayah was invited to be a part of a panel along with a good friend, Zaim Mohzani and SimraatRaj Kaur Dhillon on Awani’s Consider This: Youth | The Internship Paradox, hosted by Melisa Melina Idris.

See the panel session here: https://youtu.be/plBWPY91ywE 

As such I thought I would shamelessly weigh in as well.

I feel there are two ends of the extreme when it comes to this issue:

1. The ones against pay / high pay for interns

The best merit-based argument against this is the fact that 48.4% of employment is contributed by SME companies in Malaysia (DOSM figure for 2019) and they are not able to pay the minimum wage amount for short-term and generally what is perceived to be less skilled staff in the form of interns. This is even more so in the current post covid19 pandemic whereby businesses are struggling to overcome economic challenges.

And let’s acknowledge this, it generally is true that most interns coming into companies will be less skilled and will require handholding that takes time of the company’s personnel. Ultimately, an internship position is one whereby the intern is looking for an opportunity to learn and get on-the-job training whereby companies will expand resources to do so.

While I think the argument that companies will collapse if asked to pay minimum wage is a bit far fetch – what I do believe will happen if you make it mandatory, fewer companies will be willing to take on interns. This may (and I stress “may”) cause university students to struggle not only to get experience but also to graduate when their courses require an internship placement as part of their graduation requirements.

2. The ones for high pay/minimum wage for interns

The best merit-based argument for this is that interns are a source of labour for companies and that they are versatile and rarely have any specific job scope or protection from exploitation from employers. In executing their duties to the companies, it will incur costs to enable the intern to function in their assigned roles. This can include the need to pay for transportation, meals during work hours, need accommodations to be near the workplace and etc. This is even more so when you consider not all interns are from well-to-do families that can subsidize the internships and this allows some jobs/industries to perpetuate a staff elitism culture whereby local income earners will not be able to get opportunities there. 

Similarly, another more far-fetched argument for this side is the argument that by not subscribing to the idea of interns getting minimum wage, it would result in a company will be sending a message to the market that they are not concerned with staff welfare and will ultimately lose out in the war for talent. In reality, the market decides. If people are desperate for jobs and there is a flood of candidates, employees will take crappy placements ie an employer’s market and vice versa when it’s an employee’s market for specific times, jobs and skills.

What’s the middle ground

While both arguments are true to a certain extent, it is important to acknowledge not every internship experience will be the same owing to the fact that not every company and intern student is the same. The best merits of either argument assume either the best or the worst of the companies and/or the interns depending on which side you support.

For the record, I am not in favour of making the minimum wage mandatory for internships. And from a pure support perspective on the issue, the fact that public opinion is spilt doesn’t make it realistic to do so. The economic argument against is sound while the exploitation argument is also sound. It’s not likely you can or should make mandatory the current minimum wage (RM1500) for interns at this point nor is it fair to continue to allow companies to not provide any wages and/or provide minimal wages for internships.

Some considerations for public policymakers to consider in the current economic, social, and political climate on how to address the issues:

1. The impact of Covid19 on businesses is real. A lot of businesses are recovering and not all businesses particularly SMEs can afford initiatives that hit their bottom line.
2. That being said, the exploitation and abuse of interns are real to a certain extent but are unlikely to cover all companies.
3. Ease of compliance with any initiatives that are rolled out must be considered. If not, no matter what you decide, it means nothing to stakeholders on the ground.
4. If we take a step back and consider this rationally, the only real persons truly affected by the wage argument are university students for whom internships are a graduation requirement. Everyone else to a certain extent has the freedom of choice to follow opportunities in the market in cases of salary and issues of exploitation.

So the way forward, in my humble opinion:

1. Mandated University Internship Funds to support Interns

While the rollout of minimum wage is a bit unfeasible at the moment, the Ministry of Higher Education should make sure that universities that make internships as part of their graduation requirements must ensure that their students a provided with an internship minimum wage (say for example RM750 per month – can change depending on the location of the internship). And if needed, they should have the university create a pool fund to provide it if it isn’t being provided by the Company and/or to top it off when it does not reach a minimum amount.

It is in the best interest of the universities to do so for the benefit of their students anyways. As it is, people today are already questioning the relevancy of higher education.

2. Best Practice ESG Guideline for intern wages for the specific company categories

Bigger pools of regulators with a catchment of companies/entities under them can utilise practice notes and guidelines encouraging better pay and welfare protection for interns. You can, for example, do this via Bursa Malaysia for Public Listed Companies or GLCs via MoF. Make it known that we expect better from these entities as they are in better positions to absorb the cost and that it makes good business sense to do so given the ESG and war for talent trends.

In conclusion, a  balance measured approach is what is needed and not one where someone has to lose for someone to win.