Warning sign

A new study shows that graduates who take an unpaid internship are worse off in the long term.

You have to hand it to graduating students who agree to work for a company for nothing, in return for getting important experience, and a big tick on their CV. You could even say it is entrepreneurial of them – sacrificing salary and short-term gain for better long-term prospects.

Alas, according to a study from the Institute of Social and Economic Research at Essex University, after a period of 3½ years, unpaid former interns enjoy a salary which is £3,500 less than that enjoyed by those who go straight into paid work.

And they earn £1,500 a year less than those who went on to further study.

Interns who went to private school or had parents who worked in professional occupations, were also worse off too, but not by so much – by £2,000 a year in their case. This compares with £4,000 a year in the case of graduates from disadvantages backgrounds.

Angus Holford, author of the report told the Guardian: “I expect some people will find an internship that enables them to do the job they really want to do and that will have the big labour-market return but, on average, an internship you take won’t lead directly to a job in the profession you really wanted or the profession you did the internship in.”

But the relevance of this finding may boil down to why students took the unpaid internship. If they took it because they were unable to find the job they wanted, and had been unsuccessful in the interview process, then maybe their disappointing earnings growth was because they had less ability than those who found work.

The report suggested that some graduates took an unpaid internship as a form of experiment, they were not sure what they wanted to do, so they gave one area a go. The advice might seem to be: don’t do that.

Better advice might be to try and ensure that you clinch that graduate job in the first place, which may not be the most comforting advice to those who suffer one rejection after another, a free internship is the last resort.