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The Knesset Labor and Welfare Committee yesterday called for the state to support Israel Military Industries, which has yet to pay June salaries to 2,900 workers and July pension payments to 1,200 retirees.

Panel chair MK Haim Katz (Likud) called on the government to stop using staffers at the state-owned company as "hostages," and said the state should take over responsibility for IMI's pensions. He also slammed government plans to merge IMI with other defense companies and sell off other plants, calling it "the end for IMI."

When cash-strapped IMI applied to the state for financial assistance, the Finance Ministry insisted that further support was contingent on a new recovery plan, including the dismissal of 500 staffers and an 8 percent salary reduction for the remaining employees. However, IMI CEO Avi Felder told the committee yesterday that management is not ready to sign the recovery plan as dictated by the treasury. Felder said that IMI cannot meet deadlines on new orders, and is being fined for late delivery. He added that "the [IMI] workers need to contribute their part in an attempt to rescue the company."

Chairman of the workers' committee, Yitzhak Yehuda, told the committee that staffers would not accept the treasury's plan for layoffs and pay cuts. He said they had an alternative plan that included merging the firm and mortgaging the company's properties to the banks.