TREASURER Kevin Foley will deliver his State Budget next month, with business and staff listening anxiously to hear where the axe will fall.

Deep cuts to South Australia's public service of more than 1000 jobs will not signal a wrecking of the jobs' market, but may actually save it, industry says.

The State Government has already committed to cutting 1600 public servants over three years and there are increasing concerns that the Sustainable Budget Committee will resort to further cuts to meet its three-year $750 million savings target.

Entree Recruitment general manager Nicole Underwood said a growing labour shortage could ensure that SA's former mandarins find a good home.

"To say there are going to be 1000 people looking for work is going to be a good thing for the private sector," she said.

"We are still struggling to fill jobs. . . and the unemployment rate is falling.

"I think we are going to see a return to the skills shortages of two years ago, we are heading that way again and we will be there before you know it."

Accounting, legal and engineering professions stand the most to gain from the changes, she said, with shortages already forcing firms to look overseas to fill roles.

Teaching and nursing staff will also find open arms if they are released, she said, while lower skilled process workers - potentially made redundant from any direct services cutbacks - may see opportunities across a variety of sectors.

"There are still large employers in Adelaide who are process-based as long as they are showing they have competencies or transferable skills," Ms Underwood said.

Business SA chief executive Peter Vaughan disagrees.

"It is going to be hard for them, fighting with the call centres, fighting with the tech push in private companies to cut their labour costs and outsource where possible," he said.

Business SA's Charter for a Prosperous South Australia , released before the State election, said SA had a high number of public servants for its population.

Government data shows the number of public servants per 1000 people grew from 45.6 full-time equivalents in 2000 to 51.7 last year.

The commensurate level of taxation needed to sustain the sector "overshadowed" the state's competitive advantages, the charter says.

Similar arguments have fuelled Treasurer Kevin Foley's public sector job cuts and the drive to install a Shared Services arrangement for human resources, accounting, payroll and information technology.

Mr Vaughan says it was these same professions that are in such high demand, and Mr Foley's push to cut the sector may have created the best bureaucrats for the private sector.

"Good public sector employees over the last decade have learnt to do more with less and that makes them very much attuned to the private sector environment," he said.

"What will happen is the best of the best will be employed first, but the others should be prepared to relocate and move into regional areas.

"For some people it will be very difficult, they will be used to a fairly different environment, which doesn't always go to the bottom line, and at the end of the day, that is where the private sector lives and dies."

However, the State Government is facing serious questions over whether the cuts are still needed.

Originally painted as necessary to maintain the state's AAA credit rating - as mandated by the government's Strategic Plan - our financial performance and growing economic health may just leave breathing space for the public sector.

Associate Professor John Spoehr, the executive director of the University of Adelaide's Centre for Labour Research, says there is no fiscal basis to proceed with the cuts.

He bases this belief on the "significantly" improved economic environment, as well as the efficiency drive the public sector has been operating under, which already forces agencies to run a much tighter ship.

"The actual Budget forecasts have seriously underestimated revenue coming in. . . so much so that the argument for the $750 million cut really can no longer be substantiated. . . revenue is more than satisfactory at the moment," he said. He argues no job cuts are warranted this year, especially given the sector's rapidly-ageing profile, and says the sector would suffer from redundancies now, which would then leave it with a future skills shortage.

"I think, really, the smarter thing to do is to put a moratorium on any cuts above and beyond the normal efficiency dividends that are imposed on the public sector, because of the changed economic circumstances," he said.

Associate Professor Spoehr says what is required is further investment in the public service to cater for an otherwise solid economy, not "cuts just for the sake of cuts" to trim $6 billion from the public service wage bill.

Last year, 869 full-time equivalent staff were cut through voluntary redundancy (out of a December 2008 target of 1200) and departmental heads have consistently told Parliamentary Committees that they are struggling to meet mandated staff cuts.

Many have insinuated decisions on which programs to cut remain political choices but have been passed to them in the form of "cut 10 per cent of staff".

Public Service Association general secretary Jan McMahon met Paul Holloway, the Minister Assisting the Premier in Public Sector Management, and touched on her concerns about the looming measures but has not received any indication the Government has shifted its intentions.

"We haven't been consulted at all (but) we would be saying they shouldn't be cutting any jobs," she said.

"However, they have announced 1600 jobs to go and we are hearing that it probably will be over and above that if the commission still has its (same) terms of reference."

The State Government has not changed its advice to the SBC - it is still expected to find at least $750 million in savings over the next three years.

A spokesman said the commission's job was to find savings and efficiencies, without regard to the fluctuating economic environment, and the Government would decide which of its recommendations to implement.

"We need to have the commission work slightly outside that (economic forecasts), identify the savings that they believe we can make . . . and the Government will consider them as part of the Budget process," the spokesman said.

Asked whether the $750 million in cuts were still warranted, the spokesman said: "I think that decision will only be taken once the recommendations are made to Government."

He added there was still an argument to enact service efficiencies, if they are identified, regardless of the economic circumstances.

This year, its savings task will amount to $150 million.

On the surface, the harshest cut is in the final year - $350 million scheduled for 2012-13 - but the Government has flagged that the bulk of this, $290 million, may come from public service pockets by constraining wage rises at 2.5 per cent.

There have been early signs of what is to come: up to 800 Justice Department jobs are expected to go, as well as reduced funding to the Do It For Life health lifestyle advice program.

In June, then Public Sector Performance Commission chief executive Lance Worrall warned: "The public sector will have to do more with less."

The Public Service Association argues the sector is already stretched.

And talk of further efficiencies ignored the benefit staff and services provide to the community.

"The public sector really can't take any more job cuts - there are more people now relying on the services that the public sector delivers, whether it's in dental care, whether it's in environment or families and communities," Ms McMahon says.

"They are actually taking away services for South Australian families. If you think there are waiting lists now, this Government is going to deliver much longer waiting lists.

"Why would you, in a state like South Australia, want to create massive job losses which will have a multiplier effect?

"For every one job lost in the public sector, it affects about 2.4 jobs in the private sector."

In response to the threatened cuts, the PSA commissioned a University of Sydney study into the effects of public service staffing cuts.

The study found a high proportion of SA's public service is "involved, in some way, in front-line service delivery", confounding the Government's aim of focusing cuts on administrative staff and that many work long hours with "large amounts of unpaid overtime".

"Many areas of service provision seem to be stressed to breaking point already," the report, authored by the Workplace Research Centre, said.

"For instance, two-thirds of workers who have front-line service delivery responsibilities said that any further cutbacks will result in at least a one-for-one reduction in services."

"Of particular concern with regard to the effect of cutbacks are longer queues, delays in processing, inadequately trained staff, reductions in the quality of services and staff dissatisfaction with resultant quality of service delivery."

Ms McMahon says the PSA does not believe there is any area of government which is "overstaffed or overserviced", as demonstrated by past attempts to root out perceived red tape which had been quickly abandoned.

"But what we do say is that if the Government wants to sit down and talk to us about efficiencies, then we will listen," she said.

THE NUMBERS

The Sustainable Budget Commission's savings task:

$150 million in 2010-11

$250 million in 2011-12

$350 million in 2012-13

Public sector composition: Total employed (fulltime equivalent):

83,885 people in 2009

80,818 in 2008

79,715 in 2007

Median age: