[kictanet] [labor issues] why Kenya should urgently BAN unpaid internships

Wed Apr 3 01:07:13 EAT 2019

Greetings Listers,
There is a (misplaced) belief that unpaid internships are a "win-win" because they incentivize employers to create opportunities (and incur potentially unrecoverable costs) for on-the-job training of fresh graduates, who would otherwise not have a real-world platform for gaining experience. 

The argument often posited in support of unpaid internships is that the intern has more to gain, as it is unlikely that a fresh graduate will create more value for the employer than s/he draws from the internship. Further, it is assumed that once they have some real world experience, the graduates will have better chance at getting a paid job elsewhere.
Here's the problem with that kind of thinking:
1. Phantom Jobs Paradox: A 3 month internship most likely involves entry level assignments with very limited bounds of autonomy or direct commercial impact (e.g. Web Dev, Gathering & Compiling, Graphics design, User support, Customer Service, Reception, Office admin, Project Assistants etc). Now, given the rigid way that the labor markets work, in order for a candidate to realistically leverage the experience earned during internship, s/he will have to apply for a paid job that is very similar to what s/he did during the internship.. but wait... those are the exact same jobs being offered to unpaid interns - so the ex-intern is locked-out and remains jobless because no paid jobs exist for the experience s/he gained while working for free! 

Why would a rational employer - whose goal is to maximize margins (within a very difficult / hostile business environment) - be interested in paying an experienced ex-intern, when they can simply get a fresh unpaid intern for free, train them within hours or a couple of days, even as other unpaids hold the temporary slack? This where we are headed - if not there already. The youth are "working" but they are still technically unemployed because they are not earning a living. 

The unintended consequence here is that employers have figured out (as they were bound to) that they can use unpaid interns to profit from free labor (with the "bonus" of dodging "headaches" like PAYE, NSSF, NHIF and Px filing), and this is incentivizing them to keep rotating unpaid interns - in perpetuity. It is even worse if Government subsidizes the stipend - creating an artificial band-aid relief that does not add sustainable value. Friends, that is not job creation.

The risk here is that these policies are creating a growing, frustrated, resentful (and increasingly angry) pool of young, unemployed former interns - who feel used, and don't understand why their "investment" in work experience did not pay-off with a real job, as society had "promised". This is already being voiced on twitter (link below - #payinterns). 

While attempting to solve the youth-unemployment problem, in good faith, policy makers could be unintentionally creating a simmering political time bomb. Something to think about and address (urgently).

2. Sub-optimization problem: As stated in my article on Modernizing Tertiary Education, we have an obsolete education system which churns out graduates without taking ownership for jobs creation (comfortable in the outdated, buck-passing silo culture that believes jobs creation is someone else's i.e. private sector or government, problem / responsibility).

3. Demand vs Supply: The unpaid internship model requires a high-growth economy, which must create a greater demand for jobs each year than the available pool of candidates (>approx 800,000 - 1 Million new *real* vacancies for paid jobs annually). This incentivizes companies to compete for the experienced candidates. The fastest way to do this is to create a rapid growth environment for MSMEs and startups. But the approach should be intelligent and evidence driven. 

Data driven evidence (from the US, see link below - but relevant locally - which can be confirmed by analyzing performance of local youth entrepreneurship programs) shows that the older generation (age 36 - 69) are the best targets for MSME stimulus initiatives, with higher chances of sustainable success, whereas ages 18-29 have the worst rate of startup failures - which makes sense, because experience truly counts in business and - the learning curve in business is super-steep(!). 

Data clearly shows that it is wasteful to throw money at the youth when they don't have the skills to manage / multiply it; the grit to persevere; and broad experience to draw on - and these are not skills that can be taught in an entrepreneurship class. 

The smarter way is for Government to encourage *experienced* older founders to start businesses and get government funding + growth support on condition that they hire our youth for high quality paid apprenticeships. The minimum headcount and/or salaries can even be set by Government for those who receive funding. This should happen within a designed ecosystem framework (interested policy makers are welcome to contact me for more details on how to go about this).

>From a root-cause perspective, what is lacking in youth-oriented programs is strategic design for sustainability. We need to move from NGO-style interventionist paradigms to evidence driven master-plan design paradigms. Youth-targeting programs should be compulsorily derived from the master-plan (Vision 2030 / Big 4) and have precise, meaningful and measurable traceability back to the master-plan, in terms of real contributions towards getting the country closer to the vision. 

The end game must be clear - what does the 2030 economy look like (e.g. in measurable terms such as % unemployment, median wage, GDP, sector contribution, Stock Markets, balance of trade etc)? Or will we just wake up in 2030 and find everything has magically fallen into place? How do we know where we are right now in terms of Vision 2030 overall (and this is not about project status but macro-level metrics)? Are we 10% there? 60%? 30%? How do we know the status is reliable (e.g. can things be seen, is there data, and does on-the-ground sentiment reflect it)? What is working? What is not? What are the lessons so far? How will we know we have arrived (e.g. if we get there early)? How do we know if we are off course? Is there a data driven dashboard tracking Vision 2030?

Here's a quick recap of problems with unpaid internships:
1. It encourages exploitation of young people as free labor;
2. Creates a loophole for companies to dodge PAYE for certain types of jobs;
3. It creates phantom jobs - busy young people who are technically unemployed (not earning a living);4. It unfairly locks out the poor. Those who can't afford to work for free (where do they get fare? or food?);
5. Increases political risks by creating a pool of angry, disillusioned youth;6. It is evidence of poor economic policies (interventionist instead of evidence driven master-plan design).
Brgds,Patrick 

Patrick A. M. Maina[Cross Domain Innovator | Independent Public Policy Analyst - Indigenous Innovations]

Links:
1. European Parliament bans Unpaid Internships 
 https://www.neweurope.eu/article/european-parliament-bans-unpaid-internships/
2. Older entrepreneurs more likely to succeed: 
https://www.forbes.com/sites/nextavenue/2018/08/05/proof-that-the-most-successful-entrepreneurs-are-older-ones/#762ed9e742dd
3. Does Kenya's Youth Enterprise Development Fund Serve Young People (Maurice Sikenyi)
https://bulletin.ids.ac.uk/idsbo/article/view/2874/ONLINE%20ARTICLE
4. Worrying trend of gambling youth + 500,000 in CRB blacklisthttps://sokodirectory.com/2019/04/76-of-kenyan-youth-are-gamblers-500000-blacklisted-on-crb-a-time-to-worry/
5. Why youth and women enterprises fail in Africa (Prof Michael Chege)
https://www.theeastafrican.co.ke/business/Why-youth-and-women-enterprises-fail-in-Africa/2560-3977712-ujiwftz/index.html
6. Hashtag Payinterns (Kenya) on Twitter 
https://twitter.com/hashtag/payinterns?src=hash

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