The survey found manual workers have also suffered a drop in pay.
The fall contrasts with indications from this year's New Earnings Survey which shows that average council pay, including police and teachers' earnings, increased by more than the private sector over the last financial year.
The Low Pay Unit found 84% of council staff see no prospects for promotion and 63% are fearful about their future. Almost a fifth of respondents had financial problems, and one in 12 had sought advice over debt. Almost 30% had not had any sort of holiday lasting more than three nights in the past year.
'The majority are poorly rewarded, overworked, insecure, often find it difficult to make ends meet and fear for their future.'