A shocking revelation has hit the Big Four accounting and consulting firms, with KPMG taking a controversial step that has left many reeling. KPMG has decided to cut pay offers for some of its staff, dealing a fresh blow to the industry’s reputation.
In a recent development, KPMG has implemented a regional pay shake-up, reducing salaries for staff in certain locations. This move has sparked controversy and raised questions about the fairness of such decisions. Imagine being offered a job or a promotion, only to find out you’ll be earning thousands of pounds less than your predecessor! That’s the reality for many at KPMG’s offices near London, including towns like Reading and Watford.
A KPMG spokesperson defended the move, stating that annual benchmarking guides their reward strategy, leading to adjustments in regional pay scales. However, they assured that no existing colleagues’ salaries were decreased. But here’s where it gets controversial: while junior staff face pay cuts, KPMG’s UK partners enjoyed a 9% increase in their pay packages, averaging £816,000, despite a slowdown in consulting work.
The consulting industry has been facing challenges, with a post-pandemic slump in demand and clients becoming more cautious with their spending. KPMG, along with Deloitte, PwC, and EY, has had to grapple with these economic concerns. In an attempt to cut costs, KPMG has axed hundreds of jobs and even enacted a pay freeze for thousands of employees in 2023.
And this is the part most people miss: the Financial Times reported that junior auditors at KPMG have lost their overtime pay, with the elimination of a “recharges” system. This system allowed auditors to claim back money for weeks with over 50 hours of work. It’s a double whammy for these young professionals, who are already facing lower salaries.
The regional pay shake-up isn’t a new phenomenon. Two years ago, the Financial Reporting Council (FRC) urged KPMG and other big accounting firms to increase salaries for younger staff in audit divisions, aiming to make auditing careers more appealing. However, it seems that the message hasn’t been fully heeded.
With the budget approaching, accountancy firms like KPMG, operating as LLPs, are bracing for a potential tax raid. Chancellor Rachel Reeves aims to address the multibillion-pound hole in public finances by targeting those with the “broadest shoulders.” While some reports suggest the tax raid may not be as severe as initially feared, the impact on these firms remains a concern.
This story raises important questions: Is it fair for junior staff to bear the brunt of economic challenges? Should accounting firms prioritize attracting young talent with higher salaries? And how will the upcoming budget changes affect the industry? We’d love to hear your thoughts in the comments. Share your opinions and let’s spark a discussion!