In a new report they have also called on industry groups to tighten their guidelines around internships and trials.
The FWO has pointed the finger at the retail, beauty and hospitality industries, where some employers are making it part of their business model to make "trials" last as long as possible.
Job Watch executive director Zana Bytheway said many young workers were scared to speak out.
"Many young people see it as a part of life and don't want to damage their future job prospects by speaking up and looking like a trouble maker," she said.
"Much of this flies under the radar, but more needs to be done to protect workers."
Authors of the University of Adelaide report stress many employers are flouting the law by offering unpaid trials when they should be paying people on a probationary basis.
That way, if employers think they have hired a lemon they can show them the door, but still pay them for the contribution they have made to the business.
The report also highlighted a growing trend of university students and graduates being given internships for paid positions that will never become available.
Fair Work Ombudsman Nicholas Wilson said the number of interns being exploited had boomed in the past decade, with public relations, advertising and legal services being the main offenders.
"If left unchecked, it will become a lot more significant in many industries in the next decade," he said.
"This is not acceptable to be treating the next generation of hairdressers or lawyers in this way.
"Not all university students can get these unpaid internships because they can't afford not earn a living in the summer.
"If this is going to be the way you get employment in the future those people who can't afford it will find themselves disadvantaged because they don't have the skills others have got."
Adelaide student Lucy Small-Pearce estimates she has done at least 50 hours of unpaid work when trying to get jobs in various cafes and restaurants.
The 21-year-old, who now works in fast food to fund her way through uni, said the practice was rife.
"I was hired for the job but never paid for the trial," she said.
"I've spoken to a lot of people about it and they have had the same experience. I've often had to do two trial shifts to get the job.
"We are working just like another staff member and making a contribution by cleaning, making coffees and doing everything else. But we are never paid for it."
But while there are nightmare stories of never-ending internships and eager beavers being worked to the bone for no cash, marketing ace Kathleen Chell is one of the lucky ones.
The 21-year-old last year approached advertising company Grand Brands in the hope of gaining some work experience and soon after become their first ever intern.
Studying for a business degree at the same time, she came into the office one day a week and soon built up a solid reputation as a hard worker and quick learner.
She has now secured one day's paid work with the organisation, who she said has valued her contribution to the company.
"It has been eye-opening because there is things that you learn at university but my time here has given me perspective on the industry itself," she says.
"It shows how different it is from university assignments. I got work across a variety of assignments which was great.
"I was the marketing assistant but now I'm a digital marketing assistant. I'm still working one day a week because I'm still studying."
Kathleen said young people can struggle to get internships and work experience because a lot of marketing agencies were not willing to give up their time to teach a rookie the ropes of the business.
BIGGEST OFFENDERS
EXPLOITED INTERNS
Advertising
Marketing, PR and event management
Recruiting
Legal services
Human resource management
Accounting
Finance
Architecture
Music
Sport and exercise science
Fashion
UNPAID TRIALS
Hairdressing
Beauty
Hospitality
Retail
heraldsun.com.au 7 Feb 2013
Not paying a worker for time rendered is illegal.
The 'system' supports these kind of illegal activities, as there are huge financial benefits to all but the worker.
The government also supports this slave labour, and to amplify the 'problem' even more, Australia will import another 300,000 migrants into the workforce, to lower the wage rate of the Aussie worker.
We do not live in Financial Times, but rather with Financial Terrorists.
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