Union leaders have dismissed an offer of a 0.5 per cent pay rise as "wholly inadequate" after entering a joint claim of 7 per cent for 2012-13.
The claim reflects the latest inflation rate of 3.7 per cent plus an additional 3.3 per cent "catch-up" from previous low offers, according to the five unions representing higher education workers.
Staff have received pay rises of 0.5 per cent, 0.4 per cent and 0.5 per cent in the past three years.
However, the Universities and Colleges Employers Association stated that uncertainty over student recruitment in the first year of the new fees regime had limited institutions' ability to offer more money.
Some post-1992 universities are set to lose almost 13 per cent of their undergraduate intake in September while student numbers will rise at other institutions, according to figures released by the Higher Education Funding Council for England last week.
Matthew Knight, chair of Universities Human Resources - which represents the sector's HR professionals - said that this "market volatility" and the latest pay offer had increased the prospect of universities moving to local bargaining.
"The vast majority of universities have signed up to [national] pay negotiations and very few, if any, will move away this year," he said. "But the tensions are there. Different universities are finding themselves in different situations."
Universities that flourish under the higher education reforms, namely those that can attract large numbers of AAB students, may seek to offer better terms to their staff, said Mr Knight, who is also director of human resources at the University of Leeds.
"Five years ago, the concern [over collective bargaining] was that it was too high, but now worries come from the other end - settlements are not competitive enough," he said.
Many employers felt unable to offer higher wages because of the volatility introduced by the reforms, but some might want to offer improved terms if they do well under the new regime, he added.
His comments come after the government announced in the Budget that it would review national pay bargaining for public sector workers such as teachers - a move that could further encourage universities to follow suit.
Ucea and the higher education unions are set to meet at least twice more over the next few months in a bid to reach a settlement for 2012-13. The unions have defended their bid despite concerns that a 7 per cent increase would consume any extra income gained from £9,000 tuition fees.
Michael MacNeil, head of higher education at the University and College Union, said: "It is perfectly justifiable to enter a claim which is at least the rate of inflation.
"There has been a real-terms pay cut at a time when employers have been reducing their staffing bills and increasing their surpluses. Institutions have banked that money, and it is time for them to invest in their staff."
Dead slow and stop: participation rate stalls
The growth in the proportion of young people participating in higher education has stalled.
The provisional higher education initial participation rate (HEIPR) for 2010-11 is 46.5 per cent, unchanged from 2009-10. The Department for Business, Innovation and Skills said the figure "marks the first time in recent years that the HEIPR measure hasn't had a year-on-year increase".
The HEIPR, which refers to English-domiciled 17- to 30-year-olds studying at UK institutions, was the measure used by the Labour government for its 50 per cent participation target.
BIS added that only data recorded since 2006-07 were comparable owing to a methodology change that year.