The Histadrut Labor Federation and the Finance Ministry renewed their negotiations over a new collective work agreement for the 700,000 employees in the public sector.

This includes workers in government offices, government companies, local authorities and various statutory authorities.

The discussions will be held between the chairman of the Histadrut, Ofer Eini, the treasury's wages director, Eli Cohen, and the treasury's budgets director, Kobi Haber. The talks will also include the heads of a number of public sector unions.

The workers' representatives are demanding a 13 percent wage increase, which is far from the treasury's stand of no increase at all.

The treasury claims that the low inflation of recent years means that workers' wages have not eroded, and that their salaries have actually risen due to their promotions on the salary wage scales over the period, as well as their increased seniority.

On the other hand, the Histadrut claims that since 2001 there has been no wage agreement, and that in 2003-2005, workers' saw their pay cut by 4-17 percent as part of the agreement with then finance minister Benjamin Netanyahu.

Sources expect that the compromise will be less than 13 percent spread out over a number of years, and that the deal will also include matters relating to state pensions, and conditions for temporary workers hired through manpower contractors.