The analysis, carried out among 1,000 PR consultancies by financial publisher Plimsoll Publishing, suggests the estimated 4.1 per cent wage increase in the industry next year will financially cripple many firms.
The bleak findings placed 32 per cent of agencies – those with severe financial constraints – in ‘financial danger’.
‘We study the four-year accounts of agencies and place balance sheets in five categories: strong, good, mediocre, caution and danger,’ said Plimsoll analyst David Pattison. ‘Nearly a third showed dangerous profit loss. Productivity is down and they are borrowing too much. This cannot be sustained.’
The figures also show 49 per cent of firms will be unable to afford the 4.1 per cent average wage increase estimated for next year. These companies generate sales per employee of £72,530, while the most productive companies generate almost twice this at £120,688.