PwC transitions its employees to part time contract

PwC Australia has become the latest of the Big Four to announce a set of measures to curb the Covid-19 induced financial strain. While the firm has so far managed to avoid job cuts, PwC’s employees will have to accept significant pay cuts at all levels from the start of next month.

As spending comes to a halt in many sectors of the economy, business for advisory firms has shrunk considerably. According to one estimate, Australia’s not so long ago flourishing consulting industry may see around 20% wiped off as a result of the coronavirus impact.  

Newly appointed CEO at PwC Australia Tom Seymour indicated in a talk to staff that several of the firm’s clients had cut down on advisory spending in recent weeks, including National Australia Bank, Virgin Australia and Qantas.

“We have seen significant changes in the mix of client work during the past few weeks. Many clients have put projects on hold and we have seen a number of transactions stall given the volatility in domestic and global markets,” said Seymour in discussion with Australian Financial Review (AFR). The scenario has necessitated cost reductions at PwC to steady the ship.

On the flipside, some of PwC’s services have come into abundant demand amid Covid-19 economic conditions, as businesses look to restructure, optimise their working capital and implement business continuity plans. So some of PwC’s departments still have a significant workload, while others are operating at a much lower level than before.

PwC has distributed its measures accordingly, with plans to implement a reduction in hours and pay of up to 40% in in underworked departments, while maintaining compensation levels in others. Some departments might see a cut of even greater intensity.

“For certain teams where utilisation is very low, the working week will be reduced by a further 20 per cent (e.g, working a three-day week for a full-time person) but we don't intend to drop anyone below the 60 per cent threshold. Employees can draw on annual leave, long service leave or [time off in lieu] balances to top-up income,” said Seymour.

All partners have also been dealt a pay cut of 30-40%, while promotions and recruitment at partner level have been put on hold at the very least till the start of next year. Seymour highlighted that the drastic measures are an attempt to save jobs in the organisation as it navigates a time of crisis.

Financial executives across Australia are being forced to make difficult decisions out of concern, and other advisory firms have not been as successful in saving jobs. Big Four rival KPMG, for instance, recently announced 200 job cuts to its Australia team, along with partner pay cuts as well. Deloitte's response has been to shut shop for one week starting the 20th of April, while EY has also initiated partner pay cuts and slashed discretionary spending. All firms have also halted recruitment in the near term.