Newfoundland and Labrador took another step of austerity Monday with a formal hiring freeze on the public service.

"Please be advised that effective immediately, routine departmental recruitment activities have been temporarily suspended until further notice," Robert Thompson, clerk of the Executive Council, wrote in a memo sent to all government employees.

"While this suspension is in place the only instance where a department will proceed with staffing a specific position is if it is absolutely necessary," wrote Thompson, the provincial government's chief civil servant.

Thompson's memo comes just days after Finance Minister Jerome Kennedy revealed that, if left unchecked, the provincial debt could climb by about $4 billion in just the next couple of years.

Kennedy is currently chairing consultations leading to a spring budget that is widely expected to contain hefty spending cuts.

Looking for savings

Kennedy said on this weekend's edition of On Point with David Cochrane that while all parts of the government have been asked to find cuts, some ministers have been told to find savings of more than 10 per cent of their departmental budgets.

He also said that the cuts in the forthcoming budget will include layoffs, and that government is looking at several ways to reduce its spending on salaries, including attrition.

"For example, how many people do we expect to retire in the next period of time? We'll put a freeze on hiring new employees for a while," Kennedy told the program.

The provincial government said in December it was expecting to end the current fiscal year with a deficit of $726 million, citing a variety of factors, including oil prices that fell below projections and less revenue from the mining industry.

CUPE not impressed

Wayne Lucas, president of the Canadian Union of Public Employees Newfoundland and Labrador, said that he is not surprised by the job freeze, but he isn't happy.

"I wasn't impressed when they talked about job cuts — I'm not impressed when they say 'hiring freezes,'" Lucas said.

He said that layoffs would be a step in the wrong direction.

"I'm not of the opinion that the public sector is too big. I think that the public sector has suffered for way too many years. We were doing a bit of catch up," Lucas said.

Finance Minister Jerome Kennedy says the temporary hiring freeze is a necessary measure. (CBC)

However, Kennedy said that these measures are necessary until the province can get a better idea of the financial situation.

"We feel it's necessary at this point to ensure that there's a temporary hiring freeze put in place until we get the full picture that we need to make decisions as a cabinet for the upcoming budget year," he said.

Kennedy said the government feels the freeze is a necessary step to get the full scope of the province's finances.

"We're looking at developing a plan that will tell the people of the province what we're going to do to decrease our deficit and get back to a balanced budget and how long that will take," he said.

"This is simply an interim measure that will allow for us to get that full picture."

According to Lucas, the increase in public sector jobs was a necessary measure.

"I was of the opinion, to be honest with you, that the positions that were hired over the last number of years were positions that were needed," he said. "If not, we've got bigger problems than what government's admitting to."

The government is also adjusting to finances without the Atlantic Accord, which meant billions to the provincial treasury.

In his memo, Thompson said the government is preparing to make "difficult decisions," but intends to maintain a highly-qualified public service.

"This temporary action by no means takes away from the value of the work undertaken by departments and is motivated by the need to carefully evaluate our budgetary framework," he wrote.