Are you an employer in Malaysia who is hesitant about providing proper allowances to your interns? Do you question the importance and necessity of compensating them adequately?

Well, it's time to shift your perspective and recognise the significance of intern allowances in your organisation.

Providing fair compensation to your interns not only benefits them but also brings numerous advantages to your business in terms of talent acquisition, retention, and overall productivity.

Internships are no longer just about offering young individuals a chance to gain experience; they have become an essential part of the talent pipeline for companies.

Read on to find out why providing intern allowances is necessary for employers.

What Are Intern Allowances?

Intern allowances are a form of remuneration that companies provide to their interns, often on a monthly basis, to cover their basic needs and expenses such as food, transport, and accommodation.

They are not typically as high as full-time salaries since internships are usually temporary and part-time. However, the allowance is a significant form of compensation and recognition for the work and effort put in by the interns.

The Latest Issues Surrounding Intern Allowances in Malaysia

In Malaysia, the issue of intern exploitation has been gaining significant attention, with stories of underpaid and unpaid interns becoming increasingly prevalent.

Despite the implementation of a minimum wage increase in January 2023, many interns are left vulnerable due to policy omissions.

University students, who often have to complete internships as a graduation requirement, find these hands-on training experiences valuable. However, the exploitation of interns undermines the benefits of these opportunities.

A Malaysian student, Rashifa, known as @youngaljunied on Twitter, has taken a public stand against intern exploitation. She plans to march around her campus with a placard that reads, 'Interns are not free labour', expressing her annoyance at unpaid internships.

She aims to draw attention to this issue before her internship next semester. Rashifa's Twitter post voicing her protest has gained considerable attention, with 2.9 million views and widespread support from netizens.

In response to these concerns, Prime Minister Anwar Ibrahim is awaiting a report on unpaid intern claims and is open to formulating a special law to protect intern welfare, while the Human Resource Ministry is investigating claims of unfair pay for interns.

Does That Mean Interns Aren't Getting Minimum Wage By Law?

Internship conditions in Malaysia often see interns receiving low allowances, sometimes less than RM1,000 a month or even no pay at all.

This is despite the cost of living in big cities, especially Kuala Lumpur, being almost three times the minimum wage of RM1,500. Interns are not protected by the Employment Act 1955, which governs employees in West Malaysia and defines employees as those earning RM2,000 or less per month, those engaged in manual labour, domestic servants, or other specific categories.

Interns are also not covered by the National Wages Consultative Council Act 2011, which sets the minimum wage at RM1,200. This means they cannot use the official minimum wage as an argument for higher allowances.

The law in Malaysia is unclear about what interns are entitled to. While the minimum allowance for internships at federal government departments was raised to RM900 per month in 2019, this increase has not been reflected in the private sector.

Why Is It Important For Employers To Compensate Their Interns Well?

In spite of the uncertainty regarding the laws, employers should strive to provide equal and fair treatment to their interns. Here are the main reasons.

Attracting Quality Talent

Attracting quality talent is crucial for any organisation, and compensating your interns well can be a significant factor. Internships allow students and fresh graduates to gain practical experience and better understand the corporate world. 

However, if they are not compensated adequately, they may not be attracted to the opportunity, regardless of how good the learning prospects may be.

In a competitive market, a well-compensated internship can be the differentiating factor that attracts top talent. Offering a reasonable allowance increases the internship's appeal and communicates that the company values its interns. 

This can result in attracting highly motivated and talented individuals who can contribute significantly to the organisation's success.

Ensuring Productivity and Job Satisfaction

Compensating interns well can also greatly enhance their productivity and job satisfaction. Interns who are paid fairly for their work will likely be more motivated, engaged, and committed. 

This can lead to better performance, increased productivity, and a higher likelihood of the intern staying with the company after the internship ends.

When interns feel valued and appreciated, they are more likely to take ownership of their work and put in their best effort. This not only benefits the intern in terms of gaining valuable work experience and skills but also benefits the company by having a productive and motivated member on their team.

Promoting a Positive Employer Brand

Compensation is a reflection of how a company values its employees. 

When a company compensates its interns well, it sends a message to potential employees and the public that the company values its people and treats them fairly. This can significantly enhance the company's reputation and employer brand.

In a market where companies compete for top talent, a strong employer brand can give a company a significant competitive advantage.

Encouraging Diversity and Inclusion

Offering an excellent allowance to interns also promotes diversity and inclusion. Many talented individuals may not be able to afford to take an unpaid or low-paid internship, regardless of the opportunities it may offer. 

By compensating interns well, companies can ensure they are accessible to individuals from all backgrounds.

Ethical Considerations When Compensating Interns

Fair Compensation

Fair compensation is an essential ethical consideration when paying interns. In Malaysia, many interns are often tasked with responsibilities similar to full-time employees. 

Therefore, it is only fair that they receive a compensation that reflects the work they do. 

Unpaid internships can lead to financial strain for the intern, especially if they are expected to work full-time hours. This can also limit opportunities for those who cannot afford to work without pay, leading to a lack of diversity in the workplace.

Moreover, fair compensation can also help to motivate interns to perform better. When interns feel that they are being fairly compensated, they are likely to be more motivated and productive. This can ultimately benefit the company in the long run.

Equal Opportunities

Providing equal opportunities is another crucial ethical consideration when compensating interns. 

This means that compensation should be based on the work performed by the intern, not on their gender, race, religion, or other irrelevant factors. 

Discrimination in any form is unethical and can lead to a toxic work environment, lower productivity, and legal issues.

Transparency in Compensation

Interns should be informed about their compensation details upfront, including the amount they will be paid, when they receive their pay and any other benefits they are entitled to. 

This will help to avoid any misunderstandings or disputes later on.

When interns feel they are being treated fairly and honestly, they are more likely to have a positive attitude toward their work and the company. This can have a positive impact on their performance and their overall internship experience.

Recognition of Work

Finally, recognising the work of interns is an important ethical consideration. Interns contribute significantly to the operations of a company, and their work should be recognised and valued. 

This can be done through proper compensation, positive feedback, and opportunities for growth and development.

Recognising interns' work can boost morale, increase productivity, and improve the company's reputation as an ethical and fair employer. In turn, this can attract more talented individuals to the company, benefiting the business in the long run.

Overall,

Employers have to compensate their interns well to ensure they are recognised and valued for their work. 

By compensating interns fairly and recognising their work, employers can show that their interns are an important part of the team and contribute to the company's success.

This will not only improve the morale and productivity of intern employees but also create a positive reputation for the company as an ethical and fair employer, which can attract more talent in the future.

At Upscale, we understand the importance of getting compensated fairly, regardless of whether you’re an intern or a full-time employee.

We strive to create an environment that values and rewards the talents and hard work of all our clients and job seekers.

Reach out to us at upscale.my so we can help you find the right career path or if you seek the right talent tailored for you.