Professional services firm EY made 232 employees redundant early in November; PwC laid off 338 workers, a decision that was the result of longtime client Westpac's announcement that it would not renew its auditing contract with the firm; in October, KPMG let go of 100 employees; and KPMG shed 200 jobs following a slowdown early in February.
EY Australia CEO and Regional Managing Partner David Larocca discussed several challenges his firm is currently facing, many of which were linked to reduced demand for consulting work, which then resulted in staff layoffs.
According to Larocca, EY is navigating a "challenging and uncertain environment, with the market continuing to shift at the fastest pace" accounting firms have experienced in the last 15 years.
"This has had a significant impact on the demand for our services, and we are forecasting for this reduced demand to be felt for most, if not all, of this financial year," added Larocca. (Related: Latest BLS report shows 187K new jobs in August – but in reality, America lost 670K jobs in two months.)
Even after making these changes, Larocca noted that EY "made the difficult decision that redundancies" were required in some parts of the business, a move that resulted in 232 workers throughout Australia leaving EY Oceania.
Redundancies at the Big 4 occurred because of a growing distrust of the sector amid several scandals, specifically PwC’s leak of sensitive government information.
While PwC primarily offers services to clients in the private sector, it has also worked with politicians through the now spun-off government-facing arm, Scyne Advisory.
Earlier in 2023, reports revealed that PwC consultants working with the government had leaked information about tax legislation to consultants working with private entities to help them pay less tax. The issue resulted in serious ramifications, with PwC's regional CEO stepping down along with nine senior partners.
The revelations resulted in a strong rebuke from the Australian federal government, a major client of PwC. Treasurer Jim Chalmers criticized the firm for the "shocking breach of trust." Some lawmakers have demanded a total ban on the PwC getting more government contracts.
"Flogging off the confidential information to make a buck is not consistent with the sort of good faith that we want to see when we consult business on changes, whether it's tax changes or other changes," said Chalmers.
Meanwhile, Westpac decided to cut ties because of recent revelations surrounding the scandal.
Macquarie and Commonwealth Bank were also pressured to defend their association with PwC to their respective board members.
Large layoffs in Australia go beyond the consulting industry
However, large corporate layoffs in Australia have not been restricted to the consulting industry. While not officially announced, reports claim that Macquarie Bank also let go of several workers in its banking and financial services division.
Additionally, Commonwealth Bank has let go of at least 1,000 employees in the past 12 months to continue rapidly cutting costs.
Last September, the National Australia Bank fired 222 workers. Westpac has laid off at least 750 employees since May.
Some companies have predicted a nationwide recession while significant inflation rates in Australia have resulted in 13 successive cash rate increases since May 2022, when it sat at a low of 0.1 percent for six months.
Mark Bouris, CEO of Yellow Brick Road Home Loans, a mortgage broking company, aired his concerns about the RBA’s decision to hike the cash rate 25 basis points on Nov. 7.
In an interview with 2GB radio, Bouris that it could be "the interest rate that stops the nation" and that doing this could result in a recession.
"Businesses are borrowing money at a higher interest rate than they’ve ever seen in the last ten years. They’re the sort of business owners who will say that next year they can’t afford to have as many staff or that they will have to start cutting back on their costs," added Bouris.
He also warned the Australian populace that current economic circumstances are further complicated by an increase in immigration that is triggering a fleeting spike in sales growth.
While September was warm, Bouris advised that studying the data in terms of retail sales reveals that sales have been increasing like the population. Because of this, Australia has experienced a small increase in retail sales but it doesn’t mean the country is doing well, with small businesses and homeowners still struggling.
Additionally, the cash rate has revealed itself as a rather "blunt tool" in decreasing inflation amid plentiful savings from older generations that help buffer against its theoretical effects.
Reserve Bank of Australia Governor Michele Bullock, a baby boomer, suggested on Nov. 7 that her generation may be partly to blame for the national cost-of-living crisis.
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