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On Wednesday, the Histadrut labor federation threatened to launch a strike following a stalemate in talks with the state over the use of workers outsourced from manpower companies. The talks quagmired despite Prime Minister Benjamin Netanyahu's intervention.

Histadrut chairman Ofer Eini said the federation may disrupt work nationwide next week as a prelude to a general strike. He spoke after meeting Prime Minister Benjamin Netanyahu, Finance Minister Yuval Steinitz and Economic Organizations Liaison Committee chairman Shraga Brosh, who represents private business, in a bid to resolve the controversy over outsourced workers.

Some 12,000 outsourced workers are employed in the civil service, making up 20 percent of the employees. Most of these contract workers earn a third to half of the regular workers' wages.

The Histadrut is demanding that the state and private employers hire these workers directly, with all the attendant benefits and work conditions.

The prime minister took part in Wednesday's meeting for the third consecutive time in three days.

Such intensive involvement on the prime minister's part in the efforts to avert a strike is rare. However, officials who attended the meeting said Netanyahu failed to convince the treasury officials to agree to the Histadrut's demand to reduce the state's dependence on underpaid outsourced workers.

Steinitz suggested the state hire only a few of the contract workers, while improving the wages and conditions of those who remain employed by personnel agencies.

Eini is demanding the practice of outsourcing workers be eliminated or heavily curbed. He wants all the workers to be part of the collective wage agreements in the civil service and the private companies. This will entitle the workers to possible promotions, regular wage raises and protection from arbitrary dismissal every few months.

Eini wants cleaning workers, who earn the lowest amount among the outsourced workers, be the first to be employed as regular workers, followed by security guards.

Treasury officials claim, however, that these two groups must remain outsourced because cleaning and security do not comprise "the core" of civil service.

"It is no accident these workers are outsourced," a treasury official said.

"If the contract workers issue is to be solved, we must deal with an aspect the Histadrut is evading - the possibility of hiring workers or moving them from one post and place to another without needing the union and Histadrut's agreement," an official said.

A Histadrut official said after Wednesday's meeting, "we expected Netanyahu to instruct the treasury to take a more flexible stance that would enable continued, fruitful negotiations. This did not happen."