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The Prime Minister's Office has contacted leaders of the Histadrut labor federation with calls to open negotiations to reach a settlement which could prevent a strike scheduled for Wednesday. Sources within the Histadrut, however, have called the PMO's gesture limited, adding that no promises have been made to transfer the wages withheld from local council employees.

"As of now, we have not received any promise cast in stone that the government will transfer funds to the designated local council to pay salaries to thousands of workers," said the sources.

The Histadrut on Monday announced it would instruct its members to go on strike if the state does not put an end to the non-payment of local authority workers' wages by Wednesday.

Histadrut chairman Ofer Eini has not yet decided if the strike would be partial, or whether a general strike would be announced, a move that would cost the economy millions of shekels each day.

Over 1,000 local authority employees in 40 local authorities have not received their wages in several months.

Should the Histadrut act on its threat of a general strike, it could mean local authorities would be closed to the public, government offices could close, takeoffs at the Ben Gurion International Airport could be canceled , and it could also include some government-owned companies such as the postal authority and Israel Railways. Bank worker unions will decide Tuesday whether to join the strike as well.

Finance Minister Avraham Hirchson called on the Histadrut to refrain from shutting down the economy, since, according to Hirchson, the wages crisis will be resolved soon.

Hirchson said that "the Histadrut knows very well that there is no need for a strike. All is in the hands of the Labor Court. The State is doing everything in its power to ensure that the local authority employees receive their wages quickly."

According to Hirchson, 30 local authorities are still failing to pay their employees, after similar problems in dozens of other local authorities have already been resolved. He vowed that the treasury would do all it can to resolve the problem at the remaining 30 authorities.

Speaking on Israel Radio, Hirchson said that the "problematic" local authorities should formulate voluntary and amicable restructuring plans, in order to avoid future crises.

Eini addressed Prime Minister Ehud Olmert on the impending crisis, in a letter he send on Sunday, demanding that the government convene an emergency discussion on the transfer of funds to the local authorities.

In the letter, Eini said that some local authorities have not paid their employees for periods varying between one to eight months, and the employees of some 16 religious councils have also not been paid.

"Both the governmental and clerical representatives that handled the matter failed miserably to resolve it," Eini wrote, "despite repeated promises made to me by the minister of finance and minister of interior, nothing has been done to resolve this serious problem."

"I call on you [Olmert] to demonstrate national leadership, and act immediately to eradicate this wrong and immoral phenomenon of the failure to make timely salary payments," he wrote.

The Association of Chambers of Commerce on Sunday said that the projected cost of a general strike is NIS 500 million per day. The association called to impose sanctions on individual local authority heads who do not observe the timely payment of their employees' wages, and at the same time called on the Histadrut to refrain from going on strike.

The Histadrut said that after waiting patiently for many months for legal proceedings to finalize the issue of salary non-payment by approaching the Labor Court , they may now take "far-reaching measures to ensure that the employees of local authorities and religious councils will enjoy their basic right - the timely payment of their wages."