Hundreds blocked the entrance to the Gaza City headquarters of the consensus government, a day after it pledged to rehire tens of thousands of workers laid off seven years ago, potentially threatening the livelihood of the 50,000 or so people Hamas hired to replace them.
Government spokesman Ihab Bseiso said an unspecified number of the Hamas government's employees would also be taken on but only in case of ministerial "need".
The protest took place as ministers from the West Bank-based government were on a working visit in Gaza in only their second trip to the war-torn territory since taking office in June.
"The government is renewing its commitment to reintegrate its former employees," Bseiso said on Tuesday, referring to 70,000 people who had worked for the government prior to June 2007 when Hamas forced out its rivals in Fatah, the movement of Palestinian president Mahmud Abbas.
After Hamas took over, it hired more than 50,000 new people, whose fate have been up in the air since the government was sworn in. Of their number, around 24,000 are civil servants while the rest are employed in security functions.
Their fate has been at the heart of a bitter dispute between Hamas and the new government of prime minister Rami Hamdallah, which was set up as a result of a spring reconciliation agreement between the Islamist movement and its Fatah rivals.
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Hamas, which technically stepped down in June but has remained the de facto power in Gaza, has demanded that the government take responsibility for its employees.
But they have not been paid in seven months.
By contrast, the 70,000 workers laid off in 2007 have remained on the Palestinian Authority's payroll, despite being unemployed.
Standing outside the government's temporary headquarters, protesters held up banners reading "Puppet government" and "Enough of the lies and the procrastination."
Union boss Mohammed Siyyam told a press conference "there will never be any stability in Gaza as long as the question of the workers is not sorted out. We will continue our protests."
"We will not accept the return of (Palestinian Authority) workers, which does not resolve the question of the legitimate employees," he said, accusing the government of getting involved in a "dangerously divisive project."