Finance Secretary John Swinney confirmed his plans to introduce a pay freeze for public sector workers earning £21,000 or over during his budget statement to parliament on 17 November.
The move will apply to Scottish government staff, as well as those working in government agencies and non-departmental public bodies.
Mr Swinney told MSPs: "By taking the difficult decision to limit pay awards in the public sector, we are using the savings to protect jobs."
He also announced that he would take forward £100 million from this year's budget into next year's to deliver capital projects such as the Forth crossing, the south Glasgow hospital and the Scotland's schools for the future programme.
He encouraged local authorities to extend the council tax freeze for a further year as part of his ''social contract'' with the public.
Councils have until just before Christmas to agree to maintain police officer numbers across the country, the tax freeze for 2011-12, maintain pupil-teacher ratios in the first three years of primary schools and protect the number of teacher posts.
Mr Swinney said if councils agreed to these aims, among others, their resource funding will reduce next year by 2.6%. However, he warned if they did not accept this agreement, their funding would fall by 6.4%.
The finance secretary said the Scottish government had to find cuts of £1.3 billion in its budget for the coming year - a figure disputed by the UK Government, which put the total reduction at £900,000, taking the budget from £28.2 billion to £27.3 billion.