The Ministry of Foreign Affairs and Trade is cutting 305 positions, closing two embassies and setting up a call centre to help Kiwis in difficulty overseas.
Chief executive John Allen says the changes will save about $25 million, and there's likely to be more "efficiency gains" in the future.
Staff were told about them on Thursday and Mr Allen says maintaining morale in the ministry is "pretty challenging" as they absorb the news.
Foreign Minister Murray McCully has endorsed the changes which include:
* 305 positions will be cut - 169 ministry staff here and overseas, and 136 locally-hired staff in foreign missions.
* 600 of the ministry's 1420 staff will have to re-apply for their jobs, and Mr Allen says they won't be re-hired on the same terms and conditions.
* Embassies in Warsaw and Stockholm will be closed as diplomatic activity in Europe becomes centred on Berlin and Brussels.
* A call centre will be set up in New Zealand, probably run by a private provider, to handle calls to consulates overseas. The call centre will prioritise help for Kiwis in trouble.
* Some salaries in Wellington will be increased as staff posted overseas receive fewer perks and less accommodation support.
Mr Allen denies the changes are just cost-cutting moves and says other governments are making similar moves to improve the efficiency of their diplomatic operations.
Staff have a month to make submissions on a consultation document they've been given and final decisions will be announced in April.
Labour's foreign affairs spokesman, Phil Goff, says the ministry has been told to save $40m and the cuts are the direct result of that.
"However they dress it up, this is a gutting of core ministry staff," he said.
"It will hugely damage the capacity and performance of a ministry that has a reputation for competency, effectiveness and commitment."
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