It is likely that councils will impose a 12-month pay freeze on employees due to the current economic pressures, according to the local government industrial relations body.
Sir Steve Bullock, chair of Local Government Employers, which represents 410 English and Welsh authorities, said negotiators were under "increasing pressure to make no or a low offer" ahead of the final National Joint Council pay offer for 2009-10 expected in a few weeks.
He told Community Care today: "The feedback we are getting is that up and down the country councils are reporting very serious problems. Senior politicians and officers are very concerned about the deteriorating public sector finances and this is likely to have a significant impact in thinking about pay as well as other issues."
Bullock predicted this would not be a short-term measure, as councils were concerned about how they would fund services over the next two to three years.
He said he "would not be surprised" if there was a pay freeze, adding: "Until we know what employers will offer we can't defend or explain it."
Earlier this month, the Local Government Association claimed that the 2.75% pay settlement imposed by arbitration body Acas would force councils in England, Wales and Northern Ireland to cut jobs.
Related articles
Unison rejects LGA claim that pay deal will cost council jobs
Unison: 40% of councils have not implemented equal pay
Local government staff win 2.75% as Acas ups award