Gaza City, Gaza Strip.- Employees of the U.N. Palestinian refugee agency escalated their protest Wednesday in the Gaza Strip against sweeping pay cuts and dismissals as the organization blamed U.S. funding cuts on the crisis.

Hundreds of Unrwa staff continued a sit-in that began Monday at the organization’s Gaza office and announced plans to go on an openended strike, demanding the agency cancel recent job eliminations and downgrading of contracts.

“We declare a labor dispute. We will practice all union work. After the strike tomorrow, we will take more steps that could paralyze life in the Gaza Strip,” Amir al-Miss’hal, head of Unrwa’s Palestinian employees union, told The Associated Press.

On Wednesday, Unrwa fired 154 staff, 125 of them in Gaza, where it also downgraded another 580 to contract workers. Al-Miss’hal says the agency technically canceled about 1,000 more jobs by stopping hiring new employees to fill in for those who retired. One staffer who received a dismissal notice Wednesday attempted to set himself on fire during the sit-in, but bystanders and colleagues stopped him after he poured gasolina on his body. Unwa provides basic services to millions of Palestinians and their descendants, who were made refugees in Gaza, West Bank and neighboring Arab countries after Israel’s creation in 1948.

Earlier this year, the U.S. cut around $300 million in funding to Unrwa, resulting in a $217 million budget shortfall. U.N. officials say the cuts are “the largest ever reduction in funding Unrwa has faced.”

Of the five areas in which the agency operates, Gaza is the most vulnerable given its dire living conditions and devastated economy after more tan a decade under an Israeli-Egyptian blockade.