NZ Post has announced 400 redundancies as part of its five-year plan to adapt to the decline in letter volumes, Radio New Zealand reports.
Standard mail will only be delivered every second day progressively from July, for cities and towns.
Joe Gallagher, an organiser for the Engineering, Printing and Manufacturing Union, said the Government should not place such a high demand on the company, so it can grow.
"The Government could use that money they're potentially going to throw at SkyCity, perhaps they could give that to New Zealand Post to grow Kiwibank."
However, New Zealand Post said the Government's requirement to return a profit was not connected with the redundancies.
Mail and Communications chief operating officer Ashley Smout said the Government had no involvement in company's operations, but it was interested in the outcomes.
"The Government has expectations that all of its state owned enterprises will make an acceptable return, from New Zealand Post's perspective we've got a lot of work to do to reach that point."
He added that New Zealand Post was still a relevant company for the Government to invest in.