Capitalist economies are in decline! Their markets are contrived to perform to rigid formula. For example, control of inflation.
Unemployment is a contrived set of numbers, designed to be politically acceptable, and designed to demonstrate stability: But official figures contradict the reality of a decimated manufacturing sector, Asian bound for cheap labour. It's this sector that contributes significant start up jobs for youth, which have gone missing.

Offering tax payer subsidised internships is simply another sign the system is broken, if it can be believed it's true intention is as stated. But, if all monitory rewards were removed from the scheme, and the intern system were to be included into high school curriculum, replacing the current school supervised work experience, honest benefits could be achieved, if schools continued to monitor the scheme, against unscrupulous operators in the workforce.

The long term unemployed, being outside most industry operatives, may be facilitated into the school system, and kept under its observation, as an additional funding source for vocational education.

I often hear the lament that to get a job one needs experience, but to get experience one needs a job. Internships are a great way to get a foot in the door, and even if the internship doesn't lead directly to employment, the experience means that you are more likely to get one later.

As Rob pointed out, internship is easy to exploit, but a properly vetted internship system can weed out most of the prospective abusers. I imagine an Uber like app that rates employers and employees on the skills they impart and their employment prospects, and below a certain score they are out of the system.

Internships are great for providing an additional pair of helping hands at a fraction of the cost as compared to a full-time staff. However, interns can only assist with simple functions, else extensive training would be required in order to get them to perform tasks correctly and that would be a waste of time and resources.

Web,

This may be a newsflash, but even qualified graduates need time to learn the ropes and are not immediately useful. The point of an internship of say 3 months is to give the intern experience in the job that he aspires to (he might decide that it is not for him), the chance to gain some skills and the chance for a business to determine whether he is worth hiring.