Think tank the IPPR and campaign group Internocracy argue private sector firms are "almost certainly" breaking the law by offering unpaid internships.
The report says many volunteers could be legally defined as workers under national minimum wage legislation.
It warns the current position leaves employers open to compensation claims....
"We now have entire industries that rely on the willingness of young people to work for free," said Mr Potter.
"In the long run this is bad for business because it damages the reputation of these industries and makes it difficult for them to recruit for the broadest pool of talent.
No, that's completely and utterly wrong. The benefit of internships/unpaid apprenticeships is precisely that it produces the sort of people that industry wants.
I work in the software industry and the bottom line is that a degree in Comp Sci will give you a good education in how computers work and how to program them to a much greater depth than most workers need. What it doesn't give you is all the stuff that you get from working in an office and on real-live projects, which to my mind is about 30-40% of the job. Which is why industry values experience in a computer department over pieces of paper.
No-one has a problem with people paying for a university education and then not getting paid for their time. Internships are no different. You do some work to gain something that can't be measured in pounds and pence (although it leads to more pounds and pence later). Why shouldn't someone choose to work for free?