There will be “difficult decisions to make” after the Scottish Government agreed to hundreds of millions more in extra funding to back an improved pay offer for council workers.
The First Minister said it was a “good offer” as she thanked both COSLA and the unions for their part in negotiations.
Sturgeon said workers deserved a fair pay deal in “these really difficult times” but warned that the total cost of £600m would mean cuts elsewhere.
“There is no bottomless pit of money,” she told STV News.
“When we’ve said there was no unallocated money that was correct. Reaching this point will mean the Scottish Government has to take money from other parts of our budget to fund this.
“There is no bottomless pit of money”Nicola Sturgeon
“But we judge this as important. Council workers across the country provide vital public services and they are doing so at a time of soaring inflation and, like everybody else, struggling to make ends meet.”
Sturgeon said the deputy first minister John Swinney, who is also acting finance secretary, would outline the Government’s financial plans next week.
“Something’s got to give, we’re going to have difficult decisions to make,” the First Minister warned.
She said that action from the UK Government on energy bills and inflation would make things easier.
Unison, GMB and Unite have confirmed strikes next week in cleansing and school services have been suspended as they prepare to recommend the latest deal to their members.
The new deal will see a bump of £2,000 for workers earning up to £20,500 – meaning a 10% rise for most.
Those earning between £20,500 and £39,000 will receive £1,925. Higher earners will be given a 5% increase with a cap of £3,000 for those being paid more than £60,000.
Staff will also receive an extra day holiday and work a shorter week.
COSLA had originally offered workers a 2% rise, then 3.5%.
Following strike action and meetings with the deputy first minister, a new offer of 5% was made.
Swinney said the Scottish Government would provide a further £100m to local government for 2022-23 to support the cost of living payments being offered as part of the pay award on top of £140m already allocated.
But Friday’s deal sees £600m on the table – a 7.5% increase to the total pay bill.
Unison, Scotland’s largest local government union, said it meant 87% of its council workers would receive fully consolidated increases between 5% to 10%.