The Palestinian prime minister says government employees will only be paid half of their salaries this month because international donors are not making good on their pledges.

Salam Fayyad said Sunday donors had pledged 970 dollars million for this year's budget, but have only come through with around of third of that - about 330 million. He added much of the shortfall comes from Arab countries.

Foreign aid accounts for about one quarter of this year's overall 3.7 billion dollar budget.

Despite the fiscal crunch, he says the Palestinian Authority has sharply reduced its reliance on donor money from the 1.8 billion dollars it received three years ago.

The prime minister says the budget shortfall won't hold back Palestinian plans to seek U.N. recognition of their state in September.

Last month, the UN Relief and Works Agency for Palestine Refugees (UNRWA) released a study which revealed that the unemployment rate in Gaza remains among the highest in the world in the second half of 2010.

The study conducted by the organization said that over 45.2 percent of the working-age people in the coastal enclave were unemployed, a slight improvement from the 45.7 percent of unemployed in the parallel period in 2009.