Despite hopes that Israel would escape relatively unscathed from the global economic slump, the crisis is now hitting home with factory closures, hundreds of layoffs and outbreaks of worker unrest across the north of the country.

At the Of Haemek slaughterhouse and packing plant in the northern Israeli town of Ramat Yishai, 200 employees learned on Sunday that the factory had staggering debts and was to close.

“People here were making 3500 shekels and now that is taken from them. What is left?” asked Benny Sha’ar, a father-of-three who has worked for Of Haemek for the past 12 years. His family will now have only his wife’s wages to live on, earned from part time work in a clothing store.

In adding to their current woes, in February Of Haemek workers received only 1000 shekels of their salary. Mr Sha’ar said: “You don’t know whether to spend it on food or pay the electricity before they cut it off.”

Mr Sha’ar denied media reports that workers had thrown stones at a company executive. He said, however, that some workers had tried to keep the executive from leaving the premises so they could speak to him, and that a photographer was injured in the incident.

The scenes in Ramat Yishai come after painful reports last month from the northern Galilee town of Hazor Haglilit, where 600 workers of the Pri Galil fruit plant learned they were to lose their jobs because of plans to close the factory.

Many responded by barricading themselves into the plant grounds, burning tyres and voicing the same chant that resounded at Of Haemek this week: “Work, Bread”.

Such closures can devastate entire towns, said Shlomo Svirski, director of the Adva Center social affairs think-tank in Tel Aviv. “If Pri Galil was in Tel Aviv, its closure would be a tragedy for specific people, but Tel Aviv as a whole wouldn’t feel it. In Hazor Haglilit, the town goes down with the factory.”

The Bank of Israel forecast on Tuesday that unemployment will rise this year to 7.8 per cent, compared to 6.1 per cent last year, and that the economy will shrink by 1.5 percent.

The bank’s governor, Stanley Fischer, is drawing up a plan to fend off the downturn by extending the period of eligibility for unemployment benefits and creating 15,000 new jobs, many of which will be in infrastructure.