EY Germany is cutting jobs – even highly paid partners have to go

EY offices in Stuttgart

The company intends to strengthen its profitability before the planned split into two independent companies.

(Photo: imago images/Arnulf Hettrich)

Dusseldorf The auditing company EY is streamlining its organization in Germany with job cuts. A good 380 jobs are to be cut in so-called back-office areas such as marketing and administration. In addition, the contracts of 40 of the approximately 800 partners are to be terminated, according to company circles. The Financial Times first reported on the plans.

Officially, EY only confirmed on Thursday that “structural changes with personnel measures” were planned in Germany. We want to position ourselves in the best possible way for future success. Discussions will be held with employee representatives and those affected. The job cuts would correspond to 3.8 percent of the total workforce of 11,000 employees.

The reason for the conversion are several developments, as it is said in business circles. EY aims to strengthen profitability ahead of its proposed demerger into two independent audit and advisory firms. An internal analysis of the national companies has shown that the administrative costs in Germany are too high in a global comparison.

Wirecard scandal weakens EY in its core business

According to the circles, when it comes to the question of which of the highly paid partners has to go, performance is decisive – i.e. how well the top managers ensure new business and thus sales growth. This reduction is being carried out across all units, so it affects partners from auditing as well as those from tax, management and legal advice.

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The reorganization is also related to the weakness in the core business with the final exam after the Wirecard scandal. EY has tested the insolvent payment service provider’s fake balance sheets for years. Since then, the company has been struggling with damage to its image and problems in acquiring new audit clients.

Former Wirecard headquarters in Aschheim

EY is facing a wave of lawsuits from Wirecard creditors and investors – Commerzbank announced legal action a few days ago. Due to the ongoing uncertainty surrounding EY and the loss of image, listed companies avoid the company when awarding new mandates in the final audit.

>> Read also: Wirecard scandal – Former EY auditors relinquish licenses and evade supervisory procedures

This is made clear by an exclusive evaluation by the Handelsblatt on the rotation of auditors among the Dax companies. According to this, EY has not won a new auditor mandate in the leading German index since 2020. Competitors such as Deloitte and PwC, who greatly expanded their market share, benefited.

Unlike the competition, the EY audit division lost volume in the past 2021/22 financial year (until the end of June). The turnover of this unit fell by almost four percent to 659 million euros, while EY increased by 6.5 percent to 2.2 billion euros thanks to the booming consulting business.


According to EY, the audit division is currently growing again, which is mainly due to the audit-related advice for existing customers. This involves the financial reporting of companies and the documentation of their sustainability strategies. EY examines Volkswagen, Munich Re and Deutsche Bank, for example.

In the EY circles, it is disputed that the job cuts will mainly affect the audit division. There, the reduction of 50 jobs in the central administrative functions is planned. It is said that “not a single operationally active auditor or consultant” will have to leave the company.

But that doesn’t apply to top management: With the five percent of partners who are to go, amicable solutions for a contract termination are being sought, according to internal sources. There is no fixed date for the completion of the cost-cutting program.

Opportunities could arise for the retiring partner from the competition. Audit firms such as Deloitte and PwC are investing in staff to win business. Internally, PwC has already set a global goal of poaching EY employees.

Spin-off consulting group needs strong margin

Overall, EY also wants to strengthen the workforce in Germany. The company announced at the end of 2022 that a good 2,000 new employees are to be hired across all areas in the current financial year. This mainly compensates for the high fluctuation, which is ten to twenty percent in the auditing and consulting industry. But the bottom line is that new jobs should also be created in growth areas.

The overarching goal is to make EY Germany more profitable and thus fit for the planned split. EY is to be split globally into two independent companies that are independent of one another: one with a focus on traditional audits and one with a focus on management, tax and legal advice.

This project should be completed at the beginning of November, in the coming weeks there will be the decisive votes in the partnerships of the large national companies. In addition to the USA and Great Britain, this also includes EY Germany. Approval by majority is considered very likely.

A convincing profit margin is particularly important for the newly created consulting unit. This business is to be listed on the stock exchange as a newly founded group in the coming year.

More: Consulting gives auditors new growth spurt – KPMG catches up with EY

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