More than two-thirds of the working day of junior council staff is "lost", according to research by a management consultancy.
The study indicated that 68% of working time was not spent productively, usually as the result of poor supervision.
The research, which included the shadowing of managers in the private and local government sectors, revealed that the level of active management of staff was extremely low, averaging just 3% each day, or around 15 minutes.
It found that while private sector managers had only slightly higher levels of active management than their public sector counterparts, businesses typically had more robust systems which generated more personal accountability for performance, allowing them to achieve better staff utilisation rates - 44% compared with 32% in councils.
The report's author said improving productivity within local government could "significantly offset" the cuts planned as part of the Government's deficit reduction plan.
Knox D'Arcy, who carried out the research, claimed that if all councils improved their staff utilisation rates from 32% to the private sector's 44% the same amount of work could be done with 500,000 fewer staff.
Paul Weekes, the report's author and principal consultant at Knox D'Arcy, said: "Put simply, by matching average private sector staff utilisation levels, local government could increase its productivity by roughly a third.
"This sort of dramatic increase would help significantly offset the cuts that are on the agenda as part of the Government's austerity package."
He added that managers were found to be "uncomfortable confronting the poor performance of staff" and spent time doing work that could have been delegated to junior workers.
Knox D'Arcy carried out 1,855 surveys of managers and supervisors, including 173 from local government officers.