Police officers and staff should endure a freeze on pay to protect front-line services and jobs, the CBI has said.
The business group also backed a government White Paper, which claimed savings could be made by sharing resources.
Some 80% of spending in all 43 forces goes on the police wage bill, the BBC has reported.
Pay is currently negotiated independently on a national level, with salary levels depending on length of service and seniority. But the CBI said pay should be related to performance.
The government White Paper published last year called on police forces to claw back £100m of spending this year, rising to £545m annually by 2014.
The Police Service is about to enter the final year of a three-year pay deal, ending in early 2011.
Shadow chancellor George Osborne has previously warned the Tories would review three-year pay deals across the public sector if they were elected this year, including those for police officers.