By John Ikani
Grappling with a challenging economic climate, KPMG has opted to halt salary increases for approximately 12,000 UK employees across its four divisions.
Recent communications from the leadership conveyed that unless individuals secure a promotion, they won’t see a pay raise this year.
The decision follows KPMG’s recent job cuts and pay freeze in its deals advisory section due to a prolonged slowdown in deal activity.
Unlike the customary annual salary increments, this move impacts staff in the midst of a 4.6% inflation rate, translating into real-term reductions in pay.
The austerity extends to bonuses, with employees in KPMG’s tax and legal arm expected to receive only 55% of the full bonus amount.
Graduate and apprenticeship staff at the firm, however, remain unaffected by the pay freeze. The 12,000 figure comprises individuals entitled to pay raises due to an automatic shift into a higher pay band based on seniority, a common practice in the Big Four.
KPMG partners, who primarily share in the firm’s profits rather than relying on a salary, will largely escape the pay freeze.
This development underscores a broader trend among accounting and consulting firms adapting to challenging market conditions.
Notably, the freeze now extends beyond KPMG’s deal advisory team to impact the entire firm, hinting at the unexpected strain even in typically resilient units such as tax.
Leaders in KPMG’s tax and legal division explained in a video message that the pay freeze resulted from ongoing “market uncertainty” and a failure to meet revenue targets for the 2023 financial year.
The Big Four accounting firms, including KPMG, have all implemented redundancy programs recently. PwC, for instance, has warned its 25,000 UK staff to brace for reduced pay raises and bonuses, attributing these adjustments to the challenging market conditions.
KPMG, in particular, is in the midst of image repair following regulatory fines for its involvement in high-profile corporate scandals. These include a record £21mn penalty in October for audit failures related to the collapse of government contractor Carillion.
KPMG, with approximately 17,000 employees in the UK, has emphasized that despite the challenging economic climate, it remains committed to attracting and retaining top talent.
The firm clarified that “this year’s pay increases prioritize those who secure promotions, and while bonuses will be awarded, they will be lower than in previous years due to the challenging economic and market environment”.
