Let’s all take a moment to be thankful that things aren’t as dire here at home as they are across the pond. For the moment.
Financial Times reported on the Friday after Thanksgiving — just another day to the Bri’ish, thank goodness — that the pay freeze at KPMG UK initially in effect only for its suffering deals business is now extending to 12,000 staff across service lines. Said FT:
Bosses at the Big Four accountancy firm told staff across its four divisions in recent weeks that they would not receive a pay rise this year unless they were promoted, according to people familiar with the matter.
Bonuses will also be cut, with staff in KPMG’s 2,900-strong tax and legal arm receiving 55 per cent of the full amount that could have been paid, an insider said.
The pay freeze will not affect the firm’s graduate and apprenticeship staff, according to the people familiar with the situation.
Over the past few years the UK has seen brutal inflation though it’s currently on its way down from a peak of 11.1 percent in October of last year.
Find more statistics at Statista
See? Not so bad.
So sure, they’re getting what’s essentially a 5% pay cut but it could be so much worse. October 2023’s inflation of 4.6 percent is the lowest it’s been since October two years before and the Bank of England expects inflation to continue to fall in 2024.
In 2022, KPMG UK CEO Jon Holt hopped on LinkedIn to announce a salary increase of between £2,000 and £4,000 (approx. $2,500 to 5,000 USD) for staff writing:
It’s progressive and we’ve deliberately designed this so that our more junior colleagues feel the greatest benefit now. This is separate to our annual pay review later in the year and doesn’t include our partners or associate partners.
In total it’s an additional £51.7m ($65.7 million USD) investment in our people. Based on current trading performance, we’re also expecting to match our £100m colleague bonus pot from last year.
Things started to take a turn after that however, for example everyone in audit finding out in the spring there would be no mid-year promotions. A spokeswoman told the Times in March that “promotions typically follow an annual cycle and so in most years mid-year ones would be by exception only” and that the firm continues “to significantly invest in the development of our talent and many of our colleagues will be promoted as part of our annual promotions cycle later this year.”
And it isn’t only staff who are hurting. The firm is at its lowest equity partner level in two decades — 467 partners paid an average of £757,000 last year — bringing it to about half the size of the partnership at PwC. The firm also has 359 salaried partners, they don’t really count because Diet Partners don’t get a share of the year’s take.
Things are getting a little dark on the other side of the Atlantic, let’s hope it doesn’t make its way over here like Sir Walter Raleigh’s crew ready to conquer America.
KPMG extends pay freeze to 12,000 UK staff [Financial Times]