Council workers have been warned that their jobs are at risk following a decision to award them a pay rise.
Acas, the independent conciliation and arbitration service, has awarded local government staff a pay increase of 2.75%, an increase of 0.3% from the 2.45% that was awarded last October.
Acas was initially called in after staff staged a two-day strike last July, that closed some schools and halting refuse collection.
The move will affect 1.4 million local authority workers, including refuse collectors, dinner ladies, librarians and teaching assistants.
But council leaders have warned that the extra expenditure could lead to jobs being slashed.
Margaret Eaton, chairman of the Local Government Association, said that councils were surprised and disappointed by Acas's decision.
"We are not prepared to pass this cost on to council tax payers, so it will be jobs that have to go. Councils, like everyone else, have tightened their belts to weather the recession and the news that the arbitrators have awarded an additional 0.3% increase is an extremely bitter blow," she said.
Brian Baldwin, chairman of the employers' side of the National Joint Council, added that the Acas decision would have to be thought through very clearly. "The award will put an extra strain on services and will increase the scale of job losses that we have already seen in the sector," he said.
Unions have welcomed the move. In a joint statement with Unite and and GMB, Unison said: "Acas recognised that local government workers are among the lowest paid in the public sector and they have been affected significantly by the worsening economic climate."
Brian Strutton, national secretary for public services at GMB, said yesterday (3 March): "The Tory LGA are behaving hysterically in saying that an extra 0.3% will lead to job losses. Only this morning they were talking about creating an extra 5,000 jobs."