Limiting public sector pay growth, as called for this week by chancellor Gordon Brown, will hit recruitment and retention of care staff and cause widespread resentment, unions have warned.
In a speech to the Confederation of British Industry, Brown said the average 2.25 per cent public sector pay deal agreed this year would be a template for at least two years of low settlements.
The current three-year local government pay deal ends this year, with a 2.9 per cent rise for 2006-7.
Public sector union Unison said it was already difficult to recruit staff into council care services and holding down pay would make it worse.
A spokesperson said: “We need to be able to compete with the private sector in order to fill these jobs. Any attempt to artificially hold down wages is going to cause widespread resentment.”
Brown also called for more “local and regional pay flexibility”, but a Treasury spokesperson said national pay bargaining was likely to continue.