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September wages for 2,900 employees at Israel Military Industries (IMI) were still not paid as of yesterday and are not expected to be paid today after negotiations over the company's future broke down completely.

The state-owned defense company has yet to pay the wages - due by law on October 10, some 11 days ago - as it is in serious financial straits, and the government has conditioned any further cash injection on a sweeping recovery plan that includes layoffs and wage cuts. Suppliers are owed millions, and the Israel Electric Corporation has cut off supply to IMI's plant in Kiryat Shmona and selected parts of the company in Ramat Hasharon because of unpaid bills.

The workers, however, reject the proposed plan, and the Histadrut labor federation has threatened a public sector strike over the matter. Histadrut head MK Amir Peretz has called on acting Finance Minister Ehud Olmert to guarantee the September wages, while head of the IMI workers' committee, Yitzhak Yehuda, said yesterday that talks over the recovery plan will not restart until these wages have been paid. Yehuda added that the Histadrut is preparing to sue the company for withholding wages.

IMI management says the workers' representatives are to blame. "Yehuda conducts flippant, irresponsible talks and that's what's behind the non-payment of wages," a senior management source said. He accused Yehuda of preferring to wage a public media campaign.