The government and the Histadrut labor federation on Wednesday afternoon reached a deal to end a crippling day-long public sector strike, winning
compensation for thousands of unpaid municipal workers.

"I hearby announce that the strike is over and all workers can go back to their jobs," said Histadrut Chairman Ofer Eini. "The employees will be paid today or tomorrow."

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The Finance Ministry confirmed that a deal had been struck "solving the problem of the unpaid wages" and that Eini has agreed to several of the government's bridging proposals.

"The government did everything so that this painful problem would be solved and not recur. As we promised, the workers will receive their wages and the economy will continue booming," Finance Minister Abraham Hirchson said in a statement.

According to the settlement, which was based on an outline drafted by Prime Minister's Office Director-General Ra'anan Dinur, the Histadrut will loan a total of NIS 17 million to 620 employees in the 10 local authorities worst-hit by financial difficulties. A fund will be created for this purpose. This will be the first time the Histadrut will loan funds to workers who are not on strike.

In addition, the Histadrut received documents proving the state has transferred funds to 20 local councils to pay wages.

The state said the government would discuss amending the Municipalities Law to allow sanctions against local authorities that fail to pay their employees' wages a key Histadrut demand during the next cabinet meeting.

The amendments would allow the state to dismiss local council heads who delay the wages of more than 25 percent of employees for more than two months.

The parties agreed to come up with a payment plan for the employees of several dozen religious councils whose wages have not yet been paid. The plan is to be presented by Independence Day, April 24.

Labor unions launched a general strike at 9 A.M. Wednesday, stopping international flights and shutting many vital public services, such as rail services. Following the deal, public employees were to return to work, though some services, including the railway, were to resume to operation gradually, rather than immediately.

Earlier Wednesday, a senior Histadrut official predicted a speedy end to the strike, which began after the collapse of last-minute overnight talks between the unions and government aimed at averting the industrial action.

The head of the Histadrut's situation room, Jihad Akel, told Haaretz Online at around noon Wednesday that he believed that, "there will be an agreement within a matter of hours that allow us to end the strike."

Unofficial talks between the state and the Histadrut continued once the strike had begun, even after Eini stormed out of the talks early Wednesday, saying the government had failed to guarantee salary payments for the 3,700 local authority employees whose wages have been withheld.

Eini and Dinur spent most of Wednesday in negotiations, and talks have been ongoing at lower levels.

The government, meanwhile, is continuing the transfer of salary payments to local authorities, and there has been significant drop in the number of municipal employees who have still not been paid.

Eini is now waiting on government documentation proving that the monies have been transferred to the workers.

The strike caused the closure of all local authorities, except for departments dealing with special education. In addition, all government ministries, with the exception of the Defense Ministry, were closed to the public. The National Insurance Institute, the Employment Service, the Israel Land Administration, the vehicle licensing office, and the land registration office were also shut.

There was no train service, nor were planes allowed land or take off at Ben-Gurion International Airport. Sea ports were also shut down.

Bank of Israel employees imposed sanctions, although ATMs were to be restocked with cash. Health services and the security services, banks and the stock exchange operated as usual.

The National Labor Court has yet to rule on the state's petition for an injunction against the strike. Israel Radio said that the court is expected to rule on the matter within a short time.

The state argued that the strike was unjustified given the progress that has been made in negotiations on the issue.

The state informed the court Wednesday morning that only 10 local authorities and three religious councils have yet to receive state funds in order to pay their employees, promising that those bodies would receive the funds by Thursday.

In addition, the state said the government would discuss sanctions against local authorities that fail to pay their employees' wages, a key Histadrut demand, during the next cabinet meeting.

During Eini and Dinur's intensive overnight negotiations, the Histadrut agreed to take responsibility for part of the solution to the crisis and grant loans to local authorities that the government is unable to pay.

According to the proposal, the Histadrut would grant loans totaling millions of shekels to 625 employees in 10 local authorities which are worst-hit by financial difficulties.

But Eini said Wednesday morning that the government "was not willing to say unequivocally that every worker would be paid today. We will not agree to lees than this. We must put an end to this issue once and for all."

"It is unacceptable that in a properly functioning country employees go to work and don't get paid," said Eini. "The prime minister promised a complete solution and when I say a complete solution, that means until the last employee [is paid]."

Dinur also gave the Histadrut documents showing the government had transferred funds to 20 local authorities for the purpose of paying employees.

The government has transferred NIS 175 million to local authorities in the past two months, including NIS 85 million during the past two weeks, although not all of the funds were used to pay employees - in part because some of the money was used to pay off authorities' debts.

The government agreed to amend the Municipalities Law such that an emergency committee would be formed to take over control of any local authority that fails to pay a quarter of its employees for two months.

Eini asked for the public's forgiveness Wednesday morning, but said that the issue of employees' wages is a matter of principle and called on Israel's citizens to "show restraint and patience."

England fans can land
All flights from England will be allowed to land in Ben-Gurion Airport, general strike notwithstanding, a senior Histadrut official told Haaretz last night after attending a meeting between Eini and the heads of large unions.

The chairman of the Israel Football Association, Avi Luzon, succeeded on Tuesday in persuading Eini to permit the English fans to land in Israel despite the strike, contrary to the labor federation chief's earlier decision to allow only the English team to land.

On Tuesday, Eini met Airport Authority Chairman Pinhas Idan, and the two decided not to deny thousands of England fans to attend the game in Ramat Gan.

"We're expecting from 5,000 to 7,000 English fans to arrive in an airlift from England," a senior Histadrut official said. "We will prepare accordingly. They will all be well treated in spite of the strike. We won't tarnish Israel's image in Europe and won't hinder the huge celebration planned here," he said.