The Local Government Association has imposed a pay freeze for the third year running.
More than 1.6 million council workers will be affected.
Sarah Messenger, head of workforce at the Local Government Association, said: “This has been a very difficult decision to make but it is the right one for council tax payers and the workforce as a whole.
“A combination of rising costs and shrinking local government funding means councils were left with little choice. Increasing pay would mean more job losses and cuts to the services people need.
“The announcement represents an unprecedented third consecutive year of pay freeze and we recognise the frustration which will be felt by the workforce.
“While the financial outlook for councils is bleak, we are keen to begin discussions with the unions on a package of reform of pay and conditions that may enable us to avoid a fourth year of pay freeze in 2013.”
Heather Wakefield, head of local government at trade union Unison, said: “Many local government employees are in work, but in poverty. It is a disgrace that their pay will be frozen for the third year running, forcing even more into the poverty trap.
“Not even the lowest paid in local government will get the £250 increase the Chancellor promised them, they did not get it last year either.
“This cannot go on. Councils do have other choices, such as increasing council tax, or using their considerable reserves. The employers must think again, and at the very least come through with the £250 minimum increase for the lowest paid.”
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