PwC’s chair has defended plans to cut up to 600 jobs rather than cut partner pay amid a slowdown in client demand, saying it was important to offer “competitive” pay packages to senior staff.
The accounting and consultancy firm said it was trying to right-size the business after weaker growth, rising costs and a drop in the number of employees quitting on their own accord, in a process usually referred to as natural attrition.
PwC’s own attrition rate has dropped to 10% from 15% in recent months, against a backdrop of falling job vacancies at rival firms and startups.
The job cuts, which account for about 2.4% of its approximately 25,000 employees, will primarily affect its advisory business but will also hit staff in its tax department. It is also expected to affect almost every level of seniority, though its most senior partners and staff in their first year of work are likely to be shielded from the cuts.
The news comes just months after PwC revealed more than 1,000 of its UK partners would be paid £906,000 each, marking a slight fall from record payouts a year earlier, when their £920,000 basic pay was topped up by a £100,000 bonus.
PwC’s UK chair Kevin Ellis defended the firm’s decision to cut jobs rather than trim partner profits. “When you are running a business you have got to be competitive at all grades, including the partner grade,” he told the Financial Times, which first reported the news.
The firm revealed in August that its UK profit fell from £1.5bn to £1.3bn in 2022, although the prior year’s figure was boosted by a £139m gain from the sale of its global mobility business. It also said this summer that UK staff numbers had increased from from 24,500 to 26,000 in 2022.
The Big Four accounting firm is expected to start making staff compulsorily redundant unless employees start to leave voluntarily, and is expected to offer more generous leaving packages.
“In light of lower than normal attrition rates and subdued growth in parts of the business, we are making targeted voluntary severance offers to some of our people,” PwC said in a statement. “Decisions about jobs are never taken lightly – this is about flexing our business to demand. There are still areas of good growth and recruitment.”