Learn about the plight of unpaid internships in Malaysia: legal loopholes, financial strains, and impact on career prospects and social mobility.
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26 Jun 2024
6 Min Read
Afrina Arfa (Alumni Columnist)
Learn about the plight of unpaid internships in Malaysia: legal loopholes, financial strains, and impact on career prospects and social mobility.
Stepping away from the familiarity of their classrooms, students enrolled in higher education institutions trade their regular semesters of learning for industrial training, a requirement made compulsory by the Ministry of Higher Education (MOHE) in 2010. As a crucial stepping stone from academic to professional life, internships are viewed as providing students with invaluable work experience and vast networking opportunities. Yet, just several years later, the notion has evolved into a vicious double-edged sword.
In 2019, 106,502 bachelor's graduates in Malaysia underwent an internship period, a significant increase from the 51,293 graduates in 2010. While mandating internships across all institutions is necessary, interns face a grim reality when entering the industry. Formerly known as apprenticeship programmes, interns are not considered employees in the eyes of the law, leading many to face undercompensation or no compensation at all. In 2010, only 56.2% of graduates had paid internships, compared to 68.6% in 2019. Despite this improvement, many are still not paid or severely underpaid for the work and hours they invest, with most, if not all, organisations offering allowances lower than the national minimum wage. Interns are stuck in a lose-lose position: sustaining themselves on meagre allowances and finding themselves in a paradox of losing money instead of earning in the pursuit of enhancing their resumes and fulfilling a graduation requirement.
Despite the rise in the national minimum wage from RM1,200 to RM1,500 in May 2022, individuals under internship contracts remain excluded, not covered by the Employment Act 1955 or the National Wages Consultative Council Act 2011. In Malaysia, individuals need to hold a contract of service for at least two years to be considered employees, leaving internships, which typically last only a few months, without protection. Over the decades, numerous proposals have emerged in response to public concerns about the underpayment of interns. While the government has mandated that government-linked companies (GLCs) offer interns a minimum monthly allowance of RM800, little has been done to address this issue in private companies which host the majority of internship programmes. The National Policy on Internships (NPI) merely states that organisations are encouraged to give their interns an allowance without enforcing any mandatory requirement or clear guidelines. As a result, organisations offer allowances voluntarily, ranging from RM300 to RM900 a month.
Without legal recourse or protection, interns are left exposed to exploitation and abuse by employers. While internship programmes undeniably require a commitment to work by individuals bound by contract, many have argued the lack of legal protection exposes interns to routine tasks that add zero value rather than proper industrial training, involving longer hours than legal working hours with no additional pay. Interns have little leverage to negotiate fair treatment or address grievances with the proper organisational body, as the current regulatory framework often allows unfair treatment to go unreported and unresolved. Following public concerns, the Malaysian Employers Federation president reportedly stated that making it compulsory for companies to pay interns will discourage employers from offering internships. Nevertheless, there is still an urgent need for policymakers to set clear guidelines and enforce internship regulations in the nation to eliminate issues of exploitation.
While most organisations hosting internship programmes offer allowances (albeit often lower than the national minimum wage), many interns remain unpaid, revealing a hidden but significant issue that needs to be addressed. Unpaid internships place considerable financial strain on individuals, many of whom struggle to cover basic living expenses, transportation costs to and from their workplace, and educational expenses. Annually, over 277,000 students are required to undergo internship or industry training, making up 2% of Malaysia's labour force. Faced with intense competition from other qualified individuals and a limited job supply in the country, many interns are compelled to accept positions outside their home state to fulfil this university requirement, which naturally incurs higher costs due to the need to rent accommodations.
In 2019, 88.4% of graduates had undergone an internship period, highlighting that most interns were students in their second or third year of studies. Despite possessing relevant industry knowledge, many interns were regarded as 'free labour' due to the lack of legal protection and repercussions. As a result, interns endure the same long working hours and perform duties comparable to those of full-time employees, sometimes forced to work overtime without pay. Students often find themselves performing menial tasks unrelated to their field of study while receiving minimal opportunities for skill development. In addition to receiving no compensation for their contributions, interns struggle to balance their work, financial insecurity, and studies, potentially leading to unintended consequences in the long term.
Internship programmes were made compulsory to provide students with irreplaceable work experience and the chance of landing a permanent position after graduation. However, as the years pass and the number of interns increases, the limited number of internship positions has exposed students to unfavourable circumstances. While mandating all organisations to pay interns may deter them from offering any short-term work experiences, it is important to restructure and implement effective changes to address potential exploitation, a responsibility that extends beyond that of the government.
By collaborating with companies, higher education institutions can create structured internship programmes that ensure meaningful work experience and fair compensation. Clear guidelines and standards for internships can be carefully curated while advocating for reasonable working hours, relevant tasks, and adequate training. To tackle the current landscape's lack of protection for interns, higher education institutions can offer legal and financial assistance to students in need, ensuring that the rights and welfare of young professionals are safeguarded for the nation's future.
Afrina Arfa is a Bachelor of Finance and Economics (Honours) alumna of Taylor's University. She spends her time indulging in economic news, hoping to inspire others to think beyond the constraints of society.