A Labour government could face an early test of its resolve to resist public sector pay claims if a settlement for 340,000 teaching, administrative, professional, technical, clerical and manual staff is not agreed before the election.
Unions representing 290,000 non-teaching employees have already threatened industrial and legal action if Scottish councils do not honour a 2.8 per cent pay deal recommended by unions south of the border.
It is believed to be the first time the Convention of Scottish Local Authorities has warned that it might renege on such an offer. The unions claim Cosla is "honour bound" as part of the UK bargaining regime. But council negotiators say they cannot offer more than 2 per cent without the approval of individual councils, throwing into doubt the future of the pay machinery and provoking union allegations of breach of contract.
The four unions representing 50,000 teachers will be drawn into this battle as councillors from across Scotland meet next Friday to decide whether to adopt a common pay strategy for all their staff.
Although the teacher unions have not yet put a figure on their claim for the financial year which began this week, they are unlikely to be happy with an offer that does not match the pay review body award in England and Wales.
This has added 2.4 per cent to the annual pay bill but the increase is in two stages, with 2 per cent from April and 1.3 per cent in December, which will enhance salaries south of the border by 3.3 per cent as a baseline for the 1998-99 pay round.
The Scottish Joint Negotiating Committee for teachers meets on the Tuesday following Cosla's pay conference, by which time the results of soundings taken from all 32 councils will be available. They are being asked whether teachers' pay should be treated differently from that of other council staff.
A report presented to council leaders by Dan Brown, Cosla's head of personnel strategy, warns that they "are faced with the question of not agreeing to increase the pay bill by more than 2 per cent in 1997 for any group and facing the consequences of industrial action, which is highly likely".
Cosla negotiators have told the non-teaching unions that, while they have not finally ruled out the possibility of matching the English offer, the minimum rise of 2 per cent would still result in job losses. No such warning has been issued to the teaching unions.