Around 1.6 million council workers are to have their pay frozen for a third year in a row, local authority employers announced today.
The "unprecedented" move affects workers across England, Wales and Northern Ireland and was blamed on rising costs and shrinking funding for council services.
Employers said increasing pay would mean more job losses and further cuts to services, but unions said the announcement was a "disgrace".
Local authority leaders were warned they faced the threat of industrial action if they did not agree to take the pay issue to arbitration.
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 taxpayers 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.
"Today's 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 ofpay freeze in 2013."
Brian Strutton, national officer of the GMB, said the union would consult its members over industrial action if employers refused to go to arbitration.
He said: "The politicians who lead local councils are a disgrace to the workforces they employ for offering no pay rise for the third consecutive year while feathering their own nests.
"Council leaders' pay has shot up and councillors vote themselves higher allowances while the carers, dinner ladies, dustmen, social workers, school support staff and all the other council workers serving their communities will have seen their pay fall in real terms by over 15%.
"The Chancellor promised the country in the 2010 budget that low-paid public sector workers would be afforded some protection against the cuts so will he rein in the Conservative-controlled council leaders who have made a mockery of that promise?
"Council workers are the lowest paid in the public sector but are the only ones not to be offered even the minimum £250 the Government guaranteed.
"This three-year pay freeze is not an austerity measure, it is a deliberate political choice by local government politicians who want to win votes by keeping their workforces' pay at poverty levels to fund council tax freezes."
Mr Strutton said today's announcement came as a "shock", adding: "I don't know any other workforce in the economy that has had to bear this and 150,000 job losses and cuts to terms and conditions."
Unison's head of local government, Heather Wakefield, said: "Many local government workers are in work, but in poverty.
"It is a disgrace that pay will be frozen for the third year running, forcing even more into the poverty trap. Many of them will be women working in vital jobs in our local communities, like caring for the elderly, or for young children, or helping the vulnerable.
"Not even the lowest paid in local government will get the £250 increase the Chancellor promised them. They didn't get it last year either.
"Families can no longer cope. 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."
Unite national officer Peter Allenson said: "Local government workers are under sustained attack.
"Staff have endured a decade of below inflation pay increases and freezes. Now attacks on pensions, conditions and massive job cuts have heaped misery upon misery.
"It is time that local government employers face the fact that they have a crisis on their hands. Failure to act will push even more workers into poverty and damage local government services.
"Staff need a substantial pay increase this year. Unite will be meeting its activists across England, Wales and Northern Ireland, and fully supports its members in any action they are prepared to take for pay justice."
PA
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