It will be a tense six months for City of Ottawa employees, all wondering whether they will be among the estimated 400 who will lose their jobs as council streamlines staffing and operations.

Mayor Larry O'Brien says the layoffs of three top city managers was just the beginning.

In an already difficult economy, the threat of job cuts is a tough reality for city employees.

"I think there are, yes people definately concerned, and morale is down because when you hear that they're going to cut 300 jobs it gives the impression that what we do isn't valuable and it is," says employee Lorraine Stevens.

In the re-organization plan approved by council, the first cuts affecting senior managers will cost the city about 900 thousand dollars in severance pay. Once paid off after two years, the three jobs cut will result in 600 thousand dollars in savings every year.

"What happens now is a new senior management team, a consolidated senior management team, will now evaluate which of the third level managers, which positions there are redundant now that we're running a more streamlined operation and then it will percolate to the next level, with the ultimate goal of creating a more citizen-centric service at City Hall," says O'Brien.

The restructuring is all part of a plan to cut 100 million dollars from the city budget.

One labour advocate understands that money needs to be saved, but says job cuts are not the answer.

"One of the things that the city's unions are trying to do is to come together and to talk about different areas and ways that the city might do that... how they might be able to cut some of the costs," says Sean McKenny of the Ottawa Labour Council.

The Mayor says more jobs and services could be cut even after the first two rounds, but those would have to be approved by council.

"We're not invincible," says O'Brien. "We are vulnerable and if it is a major economic slide at a global level we will feel the impact and it's important that we do what's prudent."

The mayor and city manager would like to finish up the job of trimming city staff and operations by spring 2009. The city's budget will be released in mid-December, with many of the proposed reductions made public at that time.

With a report from CTV's Catherine Lathem and an interview featuring Michael O'Byrne with Ottawa Mayor Larry O'Brien