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With limited on-the-job training opportunities available through postsecondary institutions, and in a highly competitive job market – where 13.3 per cent of young Canadians are out of work, according to Statistics Canada – recent grads see unpaid internships as one of the few opportunities to gain practical work experience in a startup environment

Like many recent Canadian graduates, Chris Thompson struggled to find a career after finishing his public affairs and policy management degree at Carleton University, and took a basic customer service job at a retail chain in order to make ends meet.

"I spent at least six months trying to find something," he says. "I could barely get interviews, let alone a job."

Mr. Thompson eventually found an unpaid internship opportunity with an Ottawa-based software-as-a-service startup called MicroMetrics, which allowed him to keep his retail job while gaining career training for about ten hours per week.

"In the four months I was working (as an intern with Micrometrics), I learned more than any semester in university," says Mr. Thompson, who now holds a paid position as the company's operations and customer experience manager. "I'll look at it as a defining point in my life. It certainly has put me back on the track I want to be on."

With limited on-the-job training opportunities available through postsecondary institutions, and in a highly competitive job market – where 13.3 per cent of young Canadians are out of work, according to Statistics Canada – recent grads like Mr. Thompson see unpaid internships as one of the few opportunities to gain practical work experience in a startup environment.

But with the Ministry of Labour's recent crackdown on unpaid internships, under the Ontario Employment Standards Act, such opportunities may soon become even more limited.

Martin Krátký-Katz, co-founder of MicroMetrics, says that he initiated the company's internship program to help recruiting and on-boarding efforts while providing learning opportunities for recent graduates."I graduated about four or five years ago in the exact same position – didn't know what I wanted to do, didn't really have any hard skills," he said. "All these little hard skills, a lot of them aren't taught in schools."

Mr. Krátký-Katz and his staff structured an unpaid internship program that provides value to both the intern and the company, while adhering to the Employment Standards Act.

Interns are only hired if there is little or no direct benefit to the company, as to ensure they are not replacing paid positions. The hours are flexible and can be scheduled around jobs, schoolwork or other commitments. Internship periods are also limited to four months, with a formal review taking place midway. More than half of interns receive paid employment at MicroMetrics by the end of their term.

For bootstrapping startups like MicroMetrics, operating in an environment with little investment capital available, unpaid internship programs have been a saving grace. The company has been able to grow 60 to 100 per cent in each of its 14 months since launching, while adding a staff comprised of 10 former interns, in part because the internship program has eased recruiting and training costs.

"It has provided us with such quality people and such a strong corporate culture that we really wouldn't be where we are today, we wouldn't' have been able to achieve the things we have, if we hired some random person we found online," says Mr. Krátký-Katz.

Unpaid internships have become the norm in Canada in part because of a sharp decline in on-the-job training investment. A 2013 study by the Conference Board of Canada found that workplace-training investment by Canadian organizations has dropped 40 per cent in the last 20 years, from $1,207 per employee in 1993 to $705 in 2013.

"That's kind of frightening, because it's not as if in the last 20 years the workplace has gotten simpler," says Sean Geobey, a research associate with the Canadian Centre for Policy Alternatives. "The shift in who is responsible for training has moved away from the companies who use these workers to the workers themselves, and to the public sector."

Mr. Geobey adds that this should not be considered a justification for unpaid internships, specifically within the startup tech community. He cautions that unpaid internships have long-term consequences for the economy, provide a high potential for abuse, leave interns without the legal protections guaranteed in a job contract and discriminate against those who can't afford to work unpaid.

"They do have the option of giving up ownership. That's what CEOs of tech startups did in the 2000s, did in the 90s, did in the 80. That was the way companies – if they couldn't afford to pay top-notch employees – would compensate them," he said. "I think that it's really disheartening that there are tech startup founders that think so little of their highly-skilled employees that they can easily see a world where those employees aren't paid, but can't see a world where those employees are co-owners."

Providing equity is only a common practice when hiring core team members and highly experienced staff – not recent graduates, explains Nigel Kay, CEO of Local Trades Search, an Ottawa-based online platform that helps homeowners find qualified local trades professionals.

Mr. Kay's startup offers a structured internship program that accepts up to 10 interns for one day of hands-on experience per week, as well as a mandatory Saturday-afternoon training session. The program provides a syllabus and online resources gathered from Ivey League universities as well as other online training tools.

The first month of the three-month program teaches interns technical skills common to startups, though rarely found in university programs, such as market research, swipe file assembly, keyword research, online content writing, digital publishing and search engine optimization. During their second month, interns pick a specialization in Google ad words, video and social marketing or management, before putting their skills to use during the third and final month of the program.

"Over half of the interns have gotten a job offer within the first 60 days of completing the program," adds Mr. Kay.

While unpaid internships remain controversial in all industries, for recent graduates entering a work environment with few employment opportunities, minimal job experience and scant opportunities to receive training, they remain the best option for cash strapped startups and interns alike.

"The only way we could have got this off the ground and been able to create the jobs we've been able to create and deliver the amount of revenue, value and jobs for the local trades professional is to be able to really leverage some of the powerful and intelligent people coming out of the local universities," says Mr. Kay.

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