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Nearly 800 bakery workers have been taken off production lines due to last week's flour crisis, according to the representative of the country's bakeries, who is holding talks with the government.

The bakeries have threatened to halt the production of any bread type subject to price control, unless they receive appropriate compensation. Bakery owners maintain that the price price-controlled bread must increase by 12.5 percent.

The bread types involved are white, dark and regular challah. The bakeries' representative, Yohanan Aharonson, maintains that a 30.7 percent rise in the price would cover the bakeries' costs. He said that since 2004 bread has been produced at a loss, which has been covered by the relatively high price of bread not subject to price controls.

Aharonson said he will recommend to the government today to set up a joint committee of treasury, Industry and Trade Ministry and bakery officials to agree on a new mechanism that will enable repayment of the government debt to the bakeries.

The cabinet will discuss today a proposal by Industry and Trade Minister Eli Yishai that would compensate the poor yet allow bakeries to raise the price of price-controlled bread.

However, at this stage Yishai believes the bakeries are entitled to only a 3.9 percent price rise. Knesset Economic Affairs Committee head Gilad Erdan will hold an urgent meeting to discuss the shortage of bread subject to price controls. Erdan attacked Prime Minister Ehud Olmert, Labor Party leader Ehud Barak and Yishai over their anti-welfare policies.