Intern pay

In Seeking Fairness, New Minimum Wage Creates New Inequality

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New regulations may lead firms to offer shorter internships to avoid paying the minimum wage.
  • Why it matters

    Why it matters

    The minimum wage planned for 2015 has exceptions for media industry entrants, but the new regulation will make it less likely for media companies to provide longer traineeships.

  • Facts

    Facts

    • Germany’s parliament decided to introduce a minimum hourly wage of €8.50 ($11.42) as of 2015 although this excludes interns and trainees for a longer period of time.
    • The exception relieves newspapers where the market is difficult and private television stations concerned about the minimum wage costing shareholders profits.
    • The new regulations mean firms are more likely to prefer less experienced students rather than recent graduates.
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    Audio

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Selina Marx, a German student, is only 24-years old but already internships take up a sizeable part of her resume.

She completed seven during her degree although her social sciences Bachelor’s degree required only one. Nor did she ever take home more than €200 ($268) each month for her work.

She was determined to find work as a journalist and recently, her low-paid work paid off. She found an entry level job at a radio station.

It is all thanks to the internships, she said. “The more practical experience you have, the better your chances are of getting a job.”

But the market for jobs and traineeships is set to change now that Germany’s parliament decided to introduce a minimum hourly wage of €8.50 as of 2015.  The new rules mean jobs lasting more than six months require employers to pay €1,500 per month, versus the average €300 previously. There are some exceptions for internships shorter than three months.

Still, this opens up some difficult questions, starting with: What if the measure you introduce to protect people who are eager to gain experience is a disincentive for companies to provide that experience?

Springer, Burda, Gruner + Jahr, ProSiebenSat.1, RTL and other major media firms welcome the government’s exception for interns. Many said if they had been forced to pay a minimum wage of €1,500 after the sixth week of training, there would be far fewer spots for journalists available.

It would be impossible to pay more, according to Dietmar Wolff, chairman of the Federation of German Newspaper Publishers which unites 298 daily newspapers and 13 weekly publications. Many newspapers face severe financial difficulties and some have recently gone bankrupt.

Private television providers argued that shareholders are reluctant to lose out on profits due to the additional costs a minimum wage would mean.

At the same time, there are fewer positions available than there are applicants. At some TV stations, such as RTL, the ratio is one to ten; at ProSieben-Sat.1 TV station eight people apply for every placement.

The exception for interns means firms can continue to pay what they feel is appropriate for shorter traineeships.

But a longer period of training can be more helpful, according to Ms. Marx. It takes time to figure out how things really work and to understand all the processes at a workplace. “The more time I spent on a traineeship, the more I was able to learn,” she said.

At the same time, German students now have less time available to pursue an internship. In the past, when degree programs lasted up to seven years, there was plenty of time to take a semester off for work experience.

 

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Students work to balance tight schedules at university with gaining experience to become more competitive on the job market later on. Source: Gary Knight

 

Now, with the introduction of the Bachelor’s and Master’s degrees in 1999, the only chance to do so would be after completing their first degree.

Many of Ms. Marx’s friends used this longer summer time for extended traineeships. “You learn more than if you’re waitressing for six months,” she said.

But for such longer traineeships, the new regulations mean media firms would have to pay both students and recent graduates €1,500. They might decide not to offer internships that last beyond three months – even if Ms. Marx thinks this would be most helpful.

It is also unlikely that publishers and stations will opt to pay for graduates, who would be more expensive under the new structure, than young students who cost significantly less.

That would be bad news for graduates who would be more likely to bridge transitional periods with low-paying menial jobs than with work experience that would be helpful in their future careers. Also, when looking for new employees, media companies often consider former interns first.

Most people working in the media did not pursue a standard training route and studies show how valuable their patchwork periods of training and internships can be.

The minimum wage is intended to address a multifaceted issue. But the media business is complex and before making it more complicated, the government should take a closer look first.

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