For several years, the accountancy labour market has been desperate for employees.
There were shortages in almost every discipline to the point where some firms have resorted to taking on workers operating from home in far-flung parts of the country or even, in extremis, overseas.
The most common complaint from partners at practices of all sizes has been the difficulty in finding staff to get abundant amounts of work out of the door. More widely, the labour market has shrunk as a result of early retirements during the pandemic and illnesses, including the pernicious long Covid.
All of that could be about to change. Last week, PwC blithely announced that it is looking to cut its UK headcount by 600, crossing levels and practice areas. This represents approximately 2.5% of the total workforce of around 25,000.
As we know, where one of the Big Four goes, the others will usually follow, leading to worrying times at the top of the pile.
Enhanced terms
At first sight, this looks like very bad news for some highly talented accountants but, for a number of reasons, that may not necessarily be the case.
First, PwC is hoping that it can achieve the reduction through voluntary redundancies and is willing to offer enhanced terms. If you happen to work for PwC and hate it, what could be better than being paid generously to enhance your career somewhere more congenial?
Secondly, while PwC is slimming, a brief straw poll of friends working at firms outside the Big Four suggests that they are still actively recruiting and would welcome the opportunity to bring on board the kind of employees that are normally snapped up and retained by the elite.
As a result, accountants will be asking themselves why PwC is taking what to them would seem like a counterintuitive step. Most firms looking to cut staff costs by 2½% would seek to achieve this by tweaking salary bands rather than ditching workers.
One fears that, however this might be badged and marketed, it reflects the views of PwC’s economists on the state of the economy now and in the next few years, presumably based on some serious modelling and the creation of numerous algorithms.
In particular, the firm cites reduced attrition rates and subdued growth – an uncomfortable combination. The recent news that company insolvencies in October were up 18% year on year may well have confirmed to the decision-makers the wisdom of their policy.
To justify the decision, rather than explaining that the firm wishes to lose employees in order to maintain partner profit levels, they use the wonderful weasel phrase “flexing our business to demand”. That one could certainly catch on.
Bullish predictions and hot air
While Rishi Sunak and Jeremy Hunt constantly make bullish predictions about growth, these have not so far proved to be anything more than hot air. It is quite damning that a major firm of accountants would not even wait until after the Autumn Statement to make their decision.
With an election no more than a year or so away, one imagines that PwC would also be listening carefully to messages about growth being propagated by Sir Keir Starmer and Rachel Reeves. Again, they are clearly not impressed enough to retain staff should Labour happen to prove victorious at the general election.
At best, they might assume that it will take several years for new management at UK plc to achieve noticeable growth. At worst, the PwC bigwigs may have no more faith in Labour than they have in the Conservatives when it comes to a growth agenda.
Frame it how you like, rather than looking at an expanding economy in the next three to five years, those who trust the wisdom of the powers that be at the country’s largest firm must brace themselves for what is popularly known as negative growth but might just as easily be framed as positive shrinkage – in other words an oxymoronic euphemism.
It will be interesting to see how other firms react. As suggested above, it is certain that those running other major practices will be making their own assessments and either actively recruiting the people that PwC releases or, as likely, putting in place their own redundancy programmes.
Those slightly further down the ladder who still see work flooding in will still look to bring in additional staff, even if they may begin consideration of contraction in specific practice areas that could struggle if flatlining continues or transforms into a recession in 2024.
