You could (and indeed many would) argue that it's not 'working for nowt' - unless of course the people involved are not in receipt of any benefits.
I do think there is a significant potential problem in that it may distort the market in certain jobs - with employers taking a succession of people on 'placements' rather than employing permanent staff.
But, in principle, insisting that people get used to "get up, turn up, do your job, go home" is not a bad thing - and even better if the placement provides some useful skills and possibly leads to an offer of 'real' employment .