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PwC is planning to cut about 175 junior auditors in the UK and has told other staff that pay rises will be lower this year, as the Big Four firm grapples with tougher market conditions.
PwC told some 270 audit associates last week that they were part of a compulsory redundancy round, according to people familiar with the matter, with one saying headcount in the division was too high partly because of a lack of junior staff leaving voluntarily.
The cuts, which are due to take effect in August, stand in contrast to previous redundancies, which have typically been voluntary and been focused on areas other than audit. The firm intends to cut about 175 roles in total, though the final figure could be higher or lower, one of the people said.
Audit staff at the Big Four firms — Deloitte, EY, KPMG and PwC — tend to be more insulated from economic downturns than their consulting colleagues as they benefit from annually-repeating work, while consulting divisions have suffered a post-pandemic slowdown in demand.
Multiple people familiar with the matter said that non-British nationals on firm-sponsored visas were among those being made redundant. Such staff are more expensive for firms to retain than their UK counterparts. PwC declined to comment on that point.
PwC’s 25,000 UK staff across the firm were also told last week that they would receive a 2.5 per cent pay rise effective from July, slightly less than the 3 per cent raise most employees got last year.
The firm paid out bumper salary rises of 9 per cent in 2022 to half of its employees, and 6 per cent in 2023, but has since restricted pay rises after UK inflation fell back to more normal levels in recent years. UK inflation stood at 3.4 per cent in May.
The smaller increases come as the professional services sector grapples with weaker demand in some areas, and a sharp decline in staff voluntarily leaving, which has caught firms by surprise. Firms including McKinsey and Deloitte have recently cut staff, including by raising pressure on underperforming staff in tougher career reviews in McKinsey’s case.
PwC has this year retained a pandemic-era perk of allowing staff to take a half-day on Fridays during the summer, but has rebranded the initiative internally as “Summer Empowerment” rather than “Summer Working Hours”, said people familiar with the matter.
One of the people said that junior staff were more likely to take advantage of the policy than senior colleagues, adding that the change in emphasis gave senior staff more power to request junior employees work on Friday afternoons if needed.
The benefit was in place for 12 weeks in 2022 when it was introduced, but was curtailed to eight weeks the following year and six weeks last summer. Some senior partners have been critical of the policy, with one previously saying that it was disruptive to a client-facing business.
The audit associates affected by the redundancy programme were told they were being cut on a webcast last week that lasted about 10 minutes.
PwC said: “We always keep the shape of our business under review to respond to changing client demands, attrition rates and new opportunities.
“From time to time, we may need to reduce roles as a consequence — such decisions are never taken lightly. We continue to invest heavily in our people, including pay, promotions, bonuses and training.”