On Wednesday, government offices were shut and many of Israel's public services came to a halt, including the postal service and rubbish collection.
Seaports were closed to cargo and trains did not operate. There were no outgoing flights from Tel Aviv's Ben Gurion airport.
The Bank of Israel closed and the delivery of fuel to petrol stations also came under pressure with the possibility of fuel shortages if the strike continues in the coming days.
The Israeli finance ministry has said that poor planning and mismanagement by regional councils has led the councils to near bankruptcy.
Abraham Hirchson, the Israeli finance minister, criticised the strike and said the Histradrut should negotiate further with the government.
He said: "Israeli citizens have a right to quiet, stability and certainty. It is possible to resolve the problems without causing suffering to the citizens of Israel."
Israel's economy has been helped this year by record foreign investment, but a strike would erode confidence and put the economy under pressure as it copes with the expense of the war Israel waged in July and August against Hezbollah in Lebanon.
The Histadrut was founded in 1920 and represents hundreds of thousands of civil workers.
The union held a strike over similar issues two years ago. At that time, local municipalities were in deep financial trouble but the government agreed to pay salaries.