Half of the country's colleges are delaying paying out the money, which was due in August, and ballots for industrial action are due or have taken place in at least 12 colleges.
"We are in a chaotic situation," said Barry Lovejoy, an official at the National Association of Teachers in Further and Higher Education. "With the extra money which has been made available to the sector, we really shouldn't be in this position. Seven years after incorporation, we shouldn't be finding that colleges are unable to budget for nationally recommended pay increases. There is no excuse."
Many colleges blame the Further Education Funding Council's funding methodology, reporting that they are hampered by uncertainty over how much money they will have to pay back where targets have not been meet. Among those that have not paid out are Bournemouth and Poole College of FE, whose chair of governors, Bernard Vaughan, is chair of the employers' body, the Association of Colleges, which negotiated the increase.
The college is having to wait until it knows its position in terms of target-related funding, said the principal, Richard Dimbleby.
"We have met the recommended settlement every year but this year we have held back," he said. "It is still our intention to pay in full, and to back-date to August."
Oxford College of FE has said it has not enough money to pay the increase. Lecturers there are expected to ballot by the end of the year for industrial action. Lecturers have already voted to take industria action at Leeds College of Technology.
In a move likely to encourage lecturers to stand firm, Wirral Metropolitan College has agreed to pay up in full, back-dated to August, after a ballot went in favour of action.
NATFHE is calling on the AOC to put pressure on its members to implement the rise, for which the union has been fighting since incorporation in 1993.
It may ask the Department for Education and Employment for extra cash to fund the increase at hard-up colleges.
Lecturers are also having to face the problems of casual staff taking their jobs. Recent official figures show that thousands of college lecturers have lost their posts as colleges have employed more temporary staff.
The number of college teaching staff employed on regular contracts fell by more than 7,000 between 1995-6 and 1997-8 to 127,500. Between 1994-5 and 1997-8 the full-time teaching force shrank by more than 10 per cent. Although the number of part-time regularly employed staff rose slightly during the same period, there was a sharp fall between 1995-6 and 1997-8.
"These figures are a disgrace," said Paul Mackney, NATFHE's general secretary. "They represent a waste of a generation of lecturers. Full-time, experienced and qualified staff have been replaced with part-time, casual, cheaper teachers without qualifications. Inspection reports show that this is a false economy."
He said that inspection grades for lessons taught by temporary staff are typically lower than for those taught by permanent staff. Students in classes taught by temporary lecturers were also more likely to quit their course, he said.