Three-quarters of employers plan to freeze starting salaries for graduates over the next year according to Incomes Data Services’ (IDS) annual Pay and Progression for Graduates 2013 report.

With inflation running at 2.8 percent, the pay freeze equates to a pay cut in real terms for graduates. Median graduate starting salaries are set to remain £25,500 until at least 2014. IDS says that employers are restraining graduate pay due to continued fear over the economy. The number of graduate roles is forecast to decline in traditionally high paying areas like finance and the law by 12 percent and five percent respectively. IDS adds that the finance and legal sectors remain the highest paying sectors for graduates. The median graduate starting salary in the legal sector is £36,500, while the median pay for finance graduates is £29,250. Nasreen Rahman, Assistant Editor at IDS, says: “Key graduate recruiters, like the legal and finance industries, are cautious about hiring large numbers of graduates, but are still offering competitive salaries to lure the cream of the crop.”

Despite a flat outlook on pay for graduates, IDS forecast an eight percent increase in the number of overall available graduate roles over the next year, following an increase of just 0.1 percent last year. The retail sector has reported the largest increases in expected graduate intake by planning to boost graduate recruitment by 30 percent. Likewise, the service sector is also expecting to increase graduate intake by 15.7 percent. IDS adds that there is also a revival in public sector recruiting underway. IDS forecast an increase of five percent in the number of graduate public sector roles over the next year, following a long hiring freeze. Nasreen Rahman says: “Forecasts for graduate recruitment are much more buoyant this year compared to last, although some sectors are much more confident than others. An increase in the number of roles available will be welcome news for many graduates, especially if the optimism in the recruitment market can be maintained.”