(CNN) -- Workers at Israeli airports, hospitals, banks and government ministries began a nationwide strike Wednesday after union and government negotiators were unable to bridge differences over the employment of subcontracted workers.
The strike followed the failure of overnight negotiations between Israel's trade union organization, Histardut, and the ministry of finance.
At issue is the government's employment of thousands of contracted workers in various sectors.
Union officials want to see conditions for these workers improved and for them to be given full employment rights. Israel's finance ministry has said it wants to improve wages and benefits for these workers and but has not agreed to full employment rights as demanded by union officials.
Histardut officials say there up to 400,000 Israelis who work as subcontractors, many paid less and eligible for fewer benefits than regularly employed union members.
The union reached a tentative deal Tuesday with an employers organization to allow for more subcontracted cleaning workers to become regular full time employees, but no agreement could be reached for those workers subcontracted by the government.
Israeli Prime Minister Benjamin Netanyahu said in a statement Tuesday night that a strike would not solve the problems of subcontracted workers and that their conditions could be improved "without needing to put the country on strike and disrupt the life of our citizens".
Netanyahu warned of the potential economic cost of the labor action, suggesting the issues could be resolved through continued discussion.
"The Israeli economy is at a sensitive position and this is not the time to jeopardize the stability we have achieved through hard work and cooperation between the government and the labor federation at a time when leading economies around the world have crashed," the prime minister said.
The Israeli Chamber of Commerce has estimated the strike could cost the country over $100 million a week.
The strike will also close the country' stock exchange, railway lines, and halt municipal services like garbage collection.
The dispute over subcontracted workers has been building for months. In November union members staged a half-day nationwide strike over the issue and since that time court ordered negotiations have not been successful in resolving the problem.