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As a strike in the public sector hangs over their heads, acting Finance Minister Ehud Olmert and Histadrut labor federation chairman, MK Amir Peretz (One Nation), will meet on Sunday in an attempt to solve the financial crisis of state-owned Israel Military Industries (IMI). Due to the defense company's financial straits, IMI has not paid the September salaries of its 2,900 employees, which should have been paid on October 9.

Yesterday, the Histadrut's leadership met and decided to declare a labor dispute in the entire public sector on Sunday in a bid to pressure the government into transferring to IMI the funds needed to cover the payroll. Union officials, however, said that any strikes that will be called in support of IMI's workers would affect only parts of the public sector.

"The nonpayment of salaries to IMI employers is a battle of principles because it threatens all workers," Peretz said last night.

"If the government permits itself to withhold the salaries of people who work for a company that it owns, this sets a poor example for the rest of the economy," the labor leader continued.

The labor dispute is apparently the result not only of the IMI salary issue, but also of additional disagreements between the Histadrut and the treasury, such as the failure to sign new collective labor agreements and the cabinet's decision to make cuts in state-financed pensions.

The Finance Ministry yesterday responded to Peretz's statements by stating that it had offered an aid package to IMI but the management and workers were not genuinely committed to saving the company. "The government has invested NIS 10 billion in IMI in recent years, and has no intention of continuing to waste public money without immediate measures by the company's management and employees to streamline the company," the treasury said.

IMI officials stated yesterday that while the finance and defense ministries had transferred to IMI a total of NIS 300 million intended for salaries and other needs, the workers' representatives are deliberately employing delaying tactics in order to avoid signing an agreement. Company officials said the amount transferred by the government is less than one-tenth of the sum claimed by the treasury, NIS 900 million and not NIS 10 billion.