Speaking at the Conservative Party Conference in Manchester, Osborne said pay would be frozen for all public-sector staff except those earning a salary less than £18,000 and troops serving in Afghanistan.
Commenting on the announcement, Unison's general secretary, Dave Prentis, said:?? "George Osborne has revealed the Tories' real agenda today.
"They are trying to pull the wool over people's eyes by pretending they care about low-paid workers. But millions of public-sector workers will be left out in the cold by this pay freeze.
"Other staff will have to pay with job and service cuts, while bankers and tax cheats escape with a slapped wrist.
"The Tories have shown that the only time they are able to take tough action is when squeezing every last penny from the working classes."
And Duncan Brown, director at the Institute for Employment Studies, added: "The announcement of a pay freeze in the public sector can come as no surprise to anyone with any awareness of the state of public finances, and the similar situation in private sector, where 40% of awards have been frozen.
"But, the timing of this move could be criticised as a politicisation of pay determination, alongside a lack of a coherent pay policy by the Government. People's livelihoods should not become a political football.
"Next year, the situation in the public sector will not be similar to that experienced by the private sector this year. In 2009, a pay freeze still delivered you real income growth as price inflation has been negative. Price inflation will become positive early next year and increase quite fast, so people's living standards will be hit by a freeze much harder."
The news follows an announcement from chancellor Alistair Darling last month that he would freeze the pay of senior public-sector staff, including GPs and judges.
