Scotland’s 250,000 local government workers have been offered a 1% pay increase from April 2013 by council leaders seeking to end a controversial two-year pay freeze.

The deal put before trade unions is part of a £60m package that would also increase the local government living wage by 4% to £7.50, helping 17,000 of the devolved nation’s lowest paid workers.

Scottish council representatives, the Convention of Scottish Local Authorities (COSLA) revealed that the devolved nation’s 32 councils have signed up to end the pay freeze from April 2013, in a move that would be funded from existing resources for staff wages.

However COSLA officials stressed this deal ‘represents the very limits of what councils can afford’, as councils seek to balance pay increases against a projected sector-wide funding gap of more than £3bn by 2016-17.

COSLA’s human resources spokesperson, Cllr Billy Hendry, said it was a ‘landmark offer [that] not only marks the end of a pay freeze for our workforce, it marks a sectoral best for our lowest paid workers’.

‘The Scottish Local Government Living Wage is now the best in the UK outside London, and will see hourly wages rise by 4% for over 17,000 lowest paid workers, of which up to 80% are women, at a time when household budgets are under severe pressure. No other part of the public sector has signed up to helping the lowest paid on this scale or at this rate.

‘That is why we hope that the unions will recognise that today’s offer is a good deal and that it represents the very limits of what councils can afford. We are sure that staff and the communities they serve will understand that with a funding gap projected by 2016/17 of more than £3bn, councils have gone to the limits of affordability to put the very best possible deal on the table.’