The Gillard government's austerity drive has hit the Prime Minister's own department, forcing it to retrench staff.

The Department of the Prime Minister and Cabinet secretary Ian Watt told his workforce late yesterday the agency needed to shed 40 employees.

Yet the bureaucracy-wide toll now exceeds 2700 jobs, with more losses expected after next week's tough federal budget.

The Community and Public Sector Union's national secretary, Nadine Flood, urged the government today to avoid causing further harm.

"If there is a further increase in the efficiency dividend or major cuts to programs in Tuesday's budget, this already grim situation will deteriorate further," she said.

Finance Minister Penny Wong announced in November she would increase the so-called "efficiency dividend" – an annual cut to agencies' administrative budgets – from 1.5 per cent to a record 4 per cent.

The Mid-Year Economic and Fiscal Outlook, issued at the same time, revealed the government had budgeted for an estimated $667 million cut in its wages bill in 2012-13.

Dr Watt told his 695-strong workforce he had to find extra savings of about $9 million a year "to meet a range of budget pressures".

"While some savings have been straightforward, such as our decisions to further reduce our supplier costs such as travel and consultancies, reductions of this nature were only able to generate a small part of the savings required . . .

"I do not expect us to do more with less. The decisions taken by the executive include reducing our efforts in lower priority areas and restructuring our organisation so we can reduce our numbers, including [the senior executive service]."

The changes will lead to about 40 fewer jobs, of which about 15 are expected to be redundancies.

The union says about 30 government agencies have now announced they will shed staff to cope with spending cuts.

They include the departments of education (500 jobs), human services (470), health (370), climate change (300), regional Australia (220), treasury (217), resources (100) and veterans' affairs (90), as well as the Bureau of Statistics (125) and a number of smaller workplaces.

Several workforces – such as AusAID, the Defence Department and the intelligence agencies – have continued to grow, though the former two may lose staff after the budget.

Ms Flood said any further cuts would mean "longer waits for millions of Australian families, students, pensioners and the unemployed".

"Cuts to customs and quarantine will hurt primary producers, travellers and tourism. Cuts to civilian jobs in the Defence Department will hurt regional Australia and see uniformed personnel moved into administrative roles," she said.

"Despite the best efforts of hard-working public servants, it is not possible to provide the same level of service with fewer staff."

Senator Wong told agencies late last year to try to avoid involuntary redundancies by instead spending less on travel, consultants and advertising.