KPMG Partners Earned Record £816K Amid Job Cuts.

The company's profits surged by 11 per cent following these job cuts, which were a response to the decline in the consulting industry. This strategic move led to a four per cent increase in the average pay of KPMG’s 837 British partners, translating to an extra £30,000 in their pockets. By comparison, the average salary for full-time workers in the UK is around £37,430, according to the Office for National Statistics (ONS).

Job Cuts and Salary Freezes: The Company’s Response to Economic Downturn

KPMG, which employs a workforce of 16,000 people in the UK, announced last year that it would be reducing its staff by 200 positions as part of its response to a decline in demand within the consulting industry. This decision was made in response to the economic slowdown, which has hit many sectors, including consulting services.

In addition to the layoffs, KPMG imposed a salary freeze for 12,000 of its UK staff. The company attributed these decisions to a downturn in the market, particularly the consulting industry, where both governments and businesses have reduced spending due to economic challenges.

In its annual report, KPMG explained the measures taken to manage costs: "In anticipation of market challenges during the 2024 economic cycle, the business took steps to manage its cost base throughout the year, resulting in improved profitability and supporting continued investment." The firm acknowledged that its sluggish growth in 2023 was due to declining sales from consulting services, which were affected by cutbacks in both the public and private sectors.

CEO's Statement: KPMG’s Resilience in Tough Times

Despite these challenges, KPMG’s CEO, Jon Holt, expressed confidence in the firm’s long-term prospects. Holt, who is also the Senior Partner at KPMG UK, commented that the company had performed well, given the tough market conditions. He stated: "Over the past 12 months our teams have worked incredibly hard to make sure our firm and our clients could adapt, succeed and grow in an uncertain business environment."

Holt went on to emphasise that while managing costs was a priority, the company has also focused on positioning itself for sustainable growth in the future. "While we've focused on managing our costs, we have positioned the business for long-term sustainable growth."

KPMG’s Financial Performance Compared to Other Big Four Firms

KPMG, which is considered the smallest of the "Big Four" accounting firms (behind Deloitte, PwC, and EY), saw its partners’ pay increase by an average of £30,000, despite the downturn in the consulting market.

When compared to its competitors, KPMG’s partners earned considerably less than those at Deloitte, who took home an average of £1.012 million. PwC partners received £906,000 on average, while EY had the lowest payout at £723,000. These figures highlight the significant pay disparity among the major accounting firms, especially considering the challenging economic conditions and the company’s cost-cutting measures.

Challenges and Controversies for KPMG

This report comes at a time when KPMG is already under scrutiny. The firm is currently being investigated over its audit of Entain's 2022 accounts, the parent company of popular gambling brands like Ladbrokes and Coral. The investigation has raised questions about KPMG’s role in the oversight of one of its key clients.

Despite the controversies, KPMG's performance, particularly in terms of its ability to manage costs and position itself for future growth, underscores its resilience. The combination of job cuts, a salary freeze for staff, and record partner payouts is sure to continue to draw public and media attention, especially in the context of rising concerns about pay inequality between executives and lower-paid employees.

KPMG’s record pay-outs for its partners come at a time when many of its UK employees are facing financial constraints, having experienced both job losses and salary freezes. The decision to reward partners with higher pay, even as the company takes measures to cut costs, has sparked a wider debate on income inequality in the corporate world. The contrast between the pay of KPMG’s partners and the average UK worker’s salary only highlights the disparity in earnings across different levels of the workforce.

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