Finance Minister Roni Bar-On met Wednesday evening with Histadrut labor federation Chairman Ofer Eini in an attempt to reach a settlement and end the general strike in the public sector, which began Wednesday morning.

Sources said that progress had been made as both sides have lowered their demands regarding the salary of over 700 thousand public sector workers.

While the Histadrut had first demanded a ten percent hike in workers' salaries, they have lowered their demands to six percent. The Finance Ministry has also shown flexibility and is now offering a three percent hike.

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Eini met earlier with Eli Cohen, the director of wages in the Finance Ministry. Both Eini and Cohen said that the general atmosphere of the meeting was positive, despite the fact that it ended with no resolution.

Finance Ministry sources Wednesday said negotiations with Histadrut labor federation could be finalized by the end of the day.

The Histadrut are demanding a salary raise for all public sector workers, except for those who already received an increase, such as employees of the Israel Electric Corporation.

After failed talks, the strike was announced Tuesday evening. It encompasses, among other things, all government ministries, local authorities (including garbage collection), trains, ports and the postal authority. Israel's border crossings with Egypt and Jordan will also close.

The strike is set to reach Ben-Gurion International Airport at 8 A.M. Thursday morning, 24 hours after it began elsewhere.

In the 12 hours before the airport was to be closed, it planned takeoffs every three minutes for a total of 120 flights carrying 20,000 passengers, Channel 10 TV reported.

El Al was advising its passengers to go to the airport outside Tel Aviv five hours before flights were scheduled to depart instead of the usual three hours. It moved up the times of departure for at least five flights scheduled to take off after 8 A.M. Thursday.

Judge Steve Adler, president of the National Labor Court, ordered the state and the Histadrut to submit by Wednesday evening a report on the wages paid to public sector workers, who launched a strike Wednesday morning over a wage dispute.

Adler also asked for a report on the number of unionized workers in the public sector, copies of existing collective wage agreements and an account of daily financial losses caused by the general strike both directly and indirectly. The account is to include projected losses caused by the strike at Ben Gurion international airport, which is set to begin on Thursday morning.

The court rejected petitions early Wednesday morning to prevent the strike from coming into effect.

The court rejected the appeals after considering them throughout the night, issuing a statement that the state is obligated to negotiate with Histadrut and the unions.

As a means of pressuring the striking workers, Cohen announced Wednesday morning the state will deduct the work days missed due to the strike from salaries. Workers only participating in partial sanctions will also face deductions.

Before the strike was launched, Bar-On offered Eini a two-stage increase to public-sector wages, amounting to a 1 percent addition by 2009. The treasury had previously been willing to offer only a 0.2 percent increase. Eli Cohen, the treasury's head of wages, later upped the offer to 0.4 percent, plus local corrections to certain workers groups.

Eini refused, saying the proposal was "like offering to buy each worker two falafels."

Finance Minister Bar-On said that complying with the Histadrut's demands for an increase of over 10 percent would exceed the budget, thereby impeding growth and creating unemployment. "Agreeing would compromise the government's ability to reach its objectives and combat poverty. It would keep it from helping the less affluent social strata."