The 4000 workers are worried that the closure will leave them without any means of supporting their families in a region already facing severe overcrowding and poverty.
The park at the Erez crossing, a major border point between Israel and the northern edge of the Gaza Strip, has been frequently closed for extended periods by the Israeli occupation forces as a collective punishment after attacks by Palestinian resistance fighters.
Small factories and workshops in the industrial area make products such as furniture, metal works and processed food.
The shutdown is seen as the first tangible sign of Israeli withdrawal from Gaza, due to be completed by the end of 2005, if it passes successive Cabinet votes.
The pullout would mean the evacuation of 21 Israeli settlements.
Though Palestinians have welcomed Israel's proposed exit from Gaza after 37 years of occupation, workers employed at the park were critical of the decision to close it.
"This is a cruel decision for us," said one man. "I have worked here for 10 years. I don't have any work in Gaza. No one is going to employ more people then they need.
"I am going to have to sit around doing nothing. I am not going to find work in Gaza."
Unemployment among the mostly refugee population exceeds 60% in the crowded coastal Gaza region, home to 1.3 million Palestinians. Often the only job opportunities are in the industrial park or in Israel itself.
"Since Israel is going
to pull out from Gaza, why invest millions
and millions of dollars
in just protecting
something which will
Israeli trade minister
When the border crossings are open, 15,000 Palestinians cross into Israel to work, down from 40,000 before the Al-Aqsa Intifada began in 2000.
Set up two decades ago, the Erez industrial park was intended to be a prototype of cooperation between Israel and the Palestinians, providing jobs for Palestinian workers and labour for Israeli factories without the necessity of lengthy security checks required of Palestinians who cross into Israel itself.
"Since Israel is going to pull out from Gaza, why invest millions and millions of dollars in just protecting something which will move anyway?" said Israeli Trade Minister and Deputy Prime Minister Ehud Olmert.
"So what I am doing now is I'm pulling out the manufacturing facilities, relocating them in the southern cities in the state of Israel."
This will cost Israel a lot of money but it will allow these plants to carry on and to maintain all their commitments to the clients overseas because they are losing money now, Olmert said.