In a recent move, KPMG, one of the Big Four accounting firms in the UK, has imposed a pay freeze for a significant portion of its workforce, affecting approximately 12,000 employees. This decision comes amidst a challenging economic landscape, characterized by rising inflation and sluggish economic growth.
According to a Financial Times report, KPMG has informed its employees that they will not receive any pay increases this year unless they receive formal promotions. This marks a stark departure from the tradition of annual pay raises typically observed in the accounting sector.
The pay freeze extends beyond KPMG’s deals advisory arm, which had previously been affected by job cuts and pay freezes due to the prolonged slowdown in dealmaking. This suggests that the economic downturn has permeated various departments within the firm, impacting those traditionally considered more resilient to downturns, such as the tax and legal arm.
Furthermore, the FT report indicates that bonuses will also be reduced, with KPMG’s 2,900-strong tax and legal arm receiving only 55% of their potential bonus amounts. This decision highlights the firm’s commitment to cost-cutting measures amidst the challenging market conditions.
Despite the pay freeze, the 12,000 figure includes staff who qualify for pay increases due to automatic progression into higher seniority bands, a standard practice across the Big Four firms.
The pay freeze at KPMG is not an isolated incident. Other Big Four firms, including Deloitte, EY, and PwC, have also announced redundancy programs and reduced pay expectations for their UK employees. PwC, for instance, has advised its 25,000 UK staff to anticipate smaller pay rises, potential bonus freezes, and reduced salary increases.
Overall, the pay freeze at KPMG underscores the broader trend of accounting and consulting firms tightening their belts in response to the economic slowdown. This decision is likely to impact employee morale and retention, and it remains to be seen how the firms will navigate these challenging times.