Chief executive Sue Bruce would see her £158,500 salary decreased by about £1,250, as part of a Labour pledge to ensure that no employee at the local authority will earn more than 12 times the salary of the lowest paid.
Recapturing the capital is a key target for Labour in the May elections, after it lost power to a Lib Dem/SNP coalition in 2007.
The pay plans would be brought into force after the introduction of the proposed £7.20 living wage, which Labour and unions have made repeated calls for in recent years. Mrs Bruce is the only senior management figure at the council earning above the 1:12 ratio.
Labour leader Johann Lamont launched the party’s manifesto for the capital yesterday.
“This sets a precedent that never again will the highest paid get more than 12 times the wage of the lowest paid,” she said.
Ms Lamont was joined by Labour’s Edinburgh group leader on the council Andrew Burns at yesterday’s launch.
Mr Burns said: “The people of Edinburgh will play a full part in the decisions made by the council, including in the budget process, rather than the blame game we have seen under the Lib Dem-SNP council these past five years.
“We can promise the people of Edinburgh a fresh and exciting approach to local government that puts them at the heart of what we do.”
More than 1800 council workers would see their pay increase under the living wage proposals.