The Public Service Association says job cuts at Coniston-based Pillar Administration are “absolutely linked” to the government’s sell-off.
The union has described the move, announced this week, as a “major blow” for workers and the Illawarra.
It comes amid Pillar offering voluntary redundancies to employees , as part of overarching changes.
PSA south-east regional organiser Tony Heathwood said 100 jobs were expected to go in the first round.
Mr Heathwood said reducing costs was one way to make the sale “look more attractive to potential buyers”.
“Even though the government says it’s a separate process, and it was started before they made the announcement, we’re very suspicious that the two are absolutely linked,” he said.
Mr Heathwood will meet PSA members on Monday.