Government departments have recommended a 2.8% pay rise next year for millions of public sector workers, including teachers, NHS staff and senior civil servants.

Unions reacted by saying that the proposed wage increase was too low, and also threatened to strike.

The British Medical Association (BMA) said there was a “very real risk” of further industrial action if “pay erosion” was not addressed, while Unison’s Helga Pyle said the proposal was a “bitter pill”.

The recommendations will now be considered by public sector pay review bodies.

Justice Secretary Shabana Mahmood stressed that the government’s move was just “the beginning of that process”.

He said unions should recognize the “extremely difficult” financial background that Labor inherited from the Conservatives.

Inflation – which measures changes in prices over time – is projected to average 2.6% next year.

The government said departments will have to finance salary increases in 2025-26 and beyond from their budgets.

It says that unlike recent years, there will be no extra money if the recommended salary awards exceed the departments’ capacity.

The government said officials would have to consider whether the additional costs could be covered through other savings or improvements in productivity.

On Wednesday, the Prime Minister’s spokesperson said wage awards must be fair to taxpayers as well as workers, adding, “To go beyond inflation, wage awards have to be complemented by improvements in productivity.”

After winning power, the new Labor government agreed a series of above-inflation pay rises for public sector workers for 2024–25, ending long-running strikes.

The BMA said the recommended pay rise for 2025/26 “indicates a poor understanding of the issues unresolved by two years of industrial action”.

Professor Nicola Ranger, general secretary and chief executive of the Royal College of Nursing, described the pay recommendation as “deeply insulting”.

“The government has today told nursing staff it is costing them an extra £2 a day, which is less than the price of a coffee,” he said.

“Fair pay must be commensurate with structural reform. Let’s start direct negotiations now and prevent disputes and ballot measures from escalating further.”

Helga Pyle told the BBC’s Today program that the proposals could lead to staff leaving the NHS and hit morale ahead of an “incredibly difficult winter”.

The Department for Education said the 2.8% pay rise would “maintain the competitiveness of teacher pay despite the challenging financial backdrop facing the Government”.

However, the National Education Union said this fell “far short of the immediate action required”.

Secretary General Daniel Kebede said: “Teacher salaries have been cut by more than a fifth in real terms since 2010, impacting teachers’ living standards and damaging the competitive position of teaching against other graduate professions “

Eight pay review bodies recommend annual pay awards for about 45% of people working in the public sector, although ministers make the final decisions and are free to ignore their recommendations.

They take evidence from a range of sources, but unions have argued that the bodies’ hands are largely tied by constraints set by the government, including the overall level of funding available to departments.

Sign up for our Politics Essentials newsletter To read the top political analysis, get insight from across the UK and stay up to date on the big moments. It will be delivered straight to your inbox every weekday.