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* No employees face unpaid leave immediately after Jan. 2
* Defense chief says furloughs might ultimately be needed
By David Alexander
WASHINGTON, Dec 20 (Reuters) - U.S. Defense Secretary Leon Panetta sought to reassure civilian Pentagon employees on Thursday about the impact of looming budget cuts, saying no workers would face immediate unpaid leave after Jan. 2, but warning that furloughs might ultimately be necessary.
Panetta, in a memorandum circulated to employees, said the Pentagon would still have adequate funds after Jan. 2 if Congress and the president fail to reach an agreement to avert across-the-board budget cuts under a process known as sequestration.
Total funding for the year would fall, however, meaning that if the department is required to work under a reduced budget for a significant period of time, worker furloughs and other actions would be necessary, he said.
"I do not expect our day-to-day operations to change dramatically on or immediately after Jan. 2, 2013, should sequestration occur," Panetta said.
"This means that we will not be executing any immediate civilian personnel actions, such as furloughs, on that date. Should we have to operate under reduced funding levels for an extended period of time, we may have to consider furloughs or other actions in the future," he said.
Uniformed military personnel have been exempted from the impact of the budget cuts, but civilian Pentagon employees have not. The Defense Department is the largest U.S. employer, with 1.4 million active duty troops and 718,000 civilians.
"Let me assure you that we will carefully examine other options to reduce costs within the agency before taking such action (to furlough employees), taking into consideration our obligation to execute our core mission," Panetta said.
"If such action proves to be necessary, we would provide affected employees the requisite advance notice before a furlough or other personnel action would occur," he said.