Korea’s big four accounting firms face rising labor costs

Samil PricewaterhouseCoopers [Courtesy of Samil PwC]

After achieving exceptional results in the 2022 fiscal year, South Korea’s four major accounting firms - Samil PricewaterhouseCoopers, Samjong KPMG, Ernst & Young Hanyoung and Deloitte Anjin - are facing increased labor costs amid a challenging economic climate and reduced staff turnover.

The deal segment, which accounts for a significant portion of their revenue, has seen a decline in sales due to an economic slowdown. Additionally, the natural attrition rate among existing accounting professionals through job changes has notably decreased since the end of last year.

According to industry sources on Sunday, the number of newly hired certified public accountants (CPAs) at the Big Four last year was 1,993, while the number of departures was 1,235. The ratio of departures to new hires, which reflects the trend of staff turnover, was 0.62. This figure remained around 0.8 in 2020 and 2021, but significantly dropped by over 25 percent at the end of last year.

Among the individual accounting firms, Samil PwC, known for having the lowest turnover rate among the Big Four, reportedly maintained a single-digit turnover rate at the end of June. On average, the Big Four firms have a turnover rate of around 15 percent.

It was also revealed that Samjong’s turnover rate dropped to the early 10 percent range in the third quarter of last year.

“While the workload has decreased, the staff turnover rate has significantly declined. We now need to consider the efficiency of labor management, including personnel costs,” said an official from an accounting firm.

The decrease in staff turnover is attributed to both salary increases for accountants and a decrease in demand for accountants in the market. This situation is expected to result in a reduction in the hiring of new CPAs.

There were around 1,050 new hires in 2019, around 750 in 2020, around 1,140 in 2021, and around 1,340 last year. However, this year, the dominant forecast is that even including the Big Four and other major local accounting firms, it will be difficult to reach 1,000 hires.