The use of labour hire staff within the Australian Public Service is impacting the administration of government programs, the Community and Public Sector Union says.
The union has submitted this position to a federal parliamentary inquiry on the running of government programs.
State regional secretary Zac Batchelor said there were fewer APS employees now than there was in 2007 despite the state's population growth.
He said the service had driven down job numbers through redundancies and natural attrition.
Mr Batchelor said the service had opted to use workers from labour hire firms over employment of permanent staff.
He said the practice created insecure employment for workers and an added cost for the government as it needed to pay firms for their services.
"The CPSU in Tasmania are yet to speak with anyone in a management position locally within the APS, who feels that these arrangements are anything but grossly inefficient," Mr Batchelor said.
"Management reports that it restricts their ability to have control over the selection process and is extremely expensive from a training perspective."
The Australian Council of Trade Unions submission to the Senate inquiry said outsourcing of work was increasingly being used in the government sector.
It said outsourcing weakened workers' rights and, contrary to advocates, it increased government expenditure.
"An increasing academic literature indicates that overall the outsourcing of public services across countries does not reduce government expenditure," it said.
A final report on the issue will be provided to the Senate in February.