Compulsory redundancies in local councils are set to increase in the next few years as the spending squeeze from central government continues, a report warns.
The 1.6 million people who work for England's 353 councils are the country's largest workforce, but their numbers have fallen by 145,000 over the past year and further job losses are "inevitable", said the report by the Audit Commission and Local Government Association.
The report said that the local council workforce - not including teachers, firefighters or police - peaked at the equivalent of 1.063 million full-time posts in 2007 but has since fallen to 932,800 by the middle of this year.
The overall council pay bill rose by 22% between 2004/05 and 2009/10, but has since fallen 5.6% in real terms to around £30 billion and is set to fall further, said the report.
The Work in Progress report called on councils to "strike a balance" between redundancies and restructuring as they reduce workforce costs. It cited cases of councils sharing backroom staff or removing entire layers of management to maintain numbers of frontline posts.
Audit Commission chairman Michael O'Higgins said: "Each council must find its own way of cutting costs tailored to local needs, local circumstances and its own workforce.
"Councils are often the largest employer in their area, so downsizing can affect the local economy.
"Local government is a people business, with staff costs accounting for almost half the money spent by councils, so they need to be aware of all their options and the tools at their disposal."
LGA chairman Sir Merrick Cockell added: "Funding cuts have meant workforce costs must come down. Councils have been ahead of the game in making savings and have already started to reduce workforce costs.
"Unfortunately, job losses are inevitable given the scale of cuts. Where these are necessary, councils are working hard to minimise disruption to staff and services through restructuring, shared services and outsourcing. They are also looking at how they invest in and reward people to ensure they continue to deliver the most efficient public services possible."