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PwC has warned its 26,000 UK staff it will pay lower bonuses in some divisions, hand out smaller pay rises and curb the practice of working half days on Fridays as the Big Four firm battles “challenging market conditions”.
Ian Elliott, chief people officer, wrote in a memo that “our bonus pool will be similar to last year” but “several areas” would see “reductions in average per capita bonuses,” while some would also see smaller pay increases.
PwC has also rolled back a pandemic-era perk that allowed staff to take half days on Fridays during the summer, reducing the benefit from eight weeks last year to six weeks. The policy was in place for 12 weeks in 2022.
“Given market conditions, it is especially important that we carefully balance [summer working hours] “With the needs of our customers, teams and work commitments, they must continue to take priority,” Elliott said in a separate memo.
Some partners had expected the summer work hours benefit to be eliminated entirely this year. The firm’s new leadershipand one senior partner claimed this was detrimental to customer-facing business.
This is the second year in a row that staff have received disappointing pay updates and a warning about a reduction in increases and bonuses.
Most UK employees received a 3 per cent rise this year from July, PwC said in a statement to the FT. Last year, pay rises were as high as 6 per cent, and in 2022 the firm has given extraordinary 9 per cent increases to half of its employees.
The latest pay round at PwC highlights how some of Britain’s largest professional services firms are restricting pay rises after UK inflation fell back to 2 per cent in recent months after soaring above 11 per cent at the end of 2022. It also shows a stark divide within the City of London, where Law firms continue to aggressively raise salaries For junior lawyers.
PwC froze entry-level pay bands for its graduate-level consultants, according to people familiar with the matter, while there was a rise in the number of junior consultants classed as “off track” in performance reviews, effectively barring them from getting raises and bonuses.
Many of those deemed to have been off track have been placed on performance improvement plans (PIPS), the sources added. The firm’s first-year associate consultants are paid around £33,600 in London and £31,000 in its regional offices.
A PwC partner said: “Leadership was ruined by over-hiring, and now we have to pay for it. [There has been] an overemphasis on billable hours, which was used as a deciding factor in promotions, even though we were assured this would not be the case.
“We are being offered voluntary redundancy packages and placed on Pips if we stay, due to being unfairly marked as ‘out of place’ under their selective allocation model for performance reviews. This has led to unfair appraisals, delayed promotions and significant impacts on our morale and mental health.”
Associates can continue to receive a pay rise based on where their salary falls within a band. Those who perform well can be promoted to a higher band, which carries an automatic increase, said a person briefed on the pay review.
The Big Four firm recently lHe launched a round of “silent layoffs” In the UK, the FT previously reported that while Promotions for partners have also been delayed For lack of work.
PwC’s UK partners received an average of £906,000 in the year to June 2023, down from £1.03m the previous year.
PwC said: “We continue to invest heavily in our people. The vast majority received a bonus and a 3 per cent pay increase, and our summer working schedule is once again continuing, albeit for a shorter period. Bonuses are discretionary and there will always be instances where they are not awarded, such as when performance expectations are not met.”