The Professional Institute of Public Service of Canada union held a rally Friday in Halifax. CBC

The union that represents employees who work for the Atlantic Canada Opportunities Agency says job cuts announced this week will create bottlenecks for businesses applying for loans and services.

Community and enterprise development programs will be affected with the bulk of the positions being eliminated in New Brunswick and Newfoundland, said the Professional Institute of the Public Service of Canada.

"PIPS is of the opinion that … ACOA's mandate will be hampered by large scale reduction of staff, cutting back on grants and loan distribution when Canada is on the brink of recession, in an area that is highly vulnerable to the effects of economic downturn is problematic," said Gary Corbett, president of the Professional Institute of the Public Service of Canada.

Corbett made the comments on Friday during a rally held by the union in downtown Halifax. About 100 workers protested against further cuts.

Employees on temporary contracts have already been let go. The Canadian government has told all federal departments to prepare two scenarios for next year: one with five per cent fewer people and a second with 10 per cent fewer employees.

"It's only in the light of strategic operating review — not what's to come in the new budget — where every department and agency has to identify a five and 10 per cent scenario," said Corbett.

He said those future cuts could affect how much money is available to business in the form of government loans.

High-earning jobs cut

Most of the 42 positions being cut involve account managers and economic development officers who earn between $50,000 and $100,000 a year.

ACOA cited the cuts as part of a budget-cutting exercise, which will save the agency $15.2 million. Other saving measures include reducing travel and hiring fewer consultants and temporary help.

Corbett said the job losses are the result of a review carried out last year and represent just the tip of the iceberg.

Tony Purchase works as an economic development officer in enterprise development. He is working on a joint venture between companies in the Middle East and Nova Scotia.

He said companies looking to develop business plans or for loan approvals will be in for longer waits.

"We deal with clients and then we recommend what funding levels should be provided. There are fewer of me to provide those decisions in a system that's oversubscribed," said Purchase.

"ACOA is popular because we have popular programs. When you have fewer of anything, you are going to have bottlenecks."

Established in 1987 to stimulate Atlantic Canada's economy, ACOA currently employs 718 people in 30 offices throughout the region.

On Thursday, Bernard Valcourt, the federal minister responsible for ACOA, responded to the cuts during question period.

"These are not reckless cuts," he said.

"These 42 positions that will be eliminated will not take away from the services being provided to entrepreneurs and communities of Atlantic Canada, nor will they take away from the extraordinary opportunities that we got … out of the Conservative government's naval strategy."