OTTAWA — Hundreds of government workers who handle employment insurance claims are about to join the ranks of the unemployed, The Canadian Press has learned.

In a bid to balance its budget, Service Canada is cutting 600 employees across the country on top of another 600 who were let go in May.

The union which represents the employees affected by the move was formally notified Friday afternoon and was warned more cuts may come in January.

Many of those who will lose their jobs help people with everything from passport applications and pension problems to processing employment insurance claims.

"The people who are going to suffer are the people who receive these services," said Steve McCuaig, national executive vice-president of the Canada Employment and Immigration Union.

McCuaig said the move risks having a big impact on the elderly and those with disabilities who rely on Service Canada staff to help them with pension issues.

Letters will be going out next week to employees affected by the move. It's expected the cuts will come from the ranks of term employees hired on contracts.

Service Canada said in a statement the job cuts are simply following the ebb and flow of the economy, as planned.

"When these workers were hired both the temporary workers and the unions were aware that these jobs were temporary positions. When the economy began to recover and the volume of EI claims lessened, these temporary positions were no longer required."

But New Democrat Pat Martin said the cuts risk making a bad situation worse.

"The name Service Canada is almost becoming a misnomer," said the Winnipeg MP.

"We get calls as MPs from people who are terribly frustrated that the single window to government services is actually slammed shut and this is just going to make it worse."

The move maintained the integrity of collective agreements, but is forcing departments to find savings elsewhere to cover the pay increases that took effect in late June.

Treasury Board President Stockwell Day suggested last March that departments would be able to find the savings through attrition, without actual layoffs. The Public Service Alliance of Canada, however, predicted at the time that the move would result in job cuts.

Martin said he questioned in the spring how departments would be able to balance their budgets.

"You can't freeze the budget and have a salary increase and expect something not to break."

McCuaig said Friday's announcement didn't come as a complete surprise because Service Canada's management had warned it would have to reduce costs. McCuaig said term employees who work on contract for set periods are easier to cut because they don't have the same job security as permanent employees.

"What they don't need is more management figures while the service employees are being cut."

McCuaig said Service Canada hired 3,200 term employees at the outset of the economic crisis to handle the deluge of recession-related employment insurance claims. By the time the job cuts are finished, he said, all those employees will be gone.

"The expectation was that they were going to be retained until the economic crisis was over and done with," McCuaig said.

"Well, as you know, we're not nearly done with it and as a matter of fact the unemployment rate has not gone down that much, so the demand is still there."

Liberal finance critic John McCallum said Canada's economy remains fragile and now is the wrong time to cut jobs.

"I think it is not the time to slam on the fiscal brakes and lay off hundreds of people, particularly when the economy is really weak," said McCallum.

He's also concerned the cuts will affect services.

"How can you lay off hundreds of people at Service Canada without affecting service?"