Shimoni made the decision in response to the terror attack in Jerusalem by Arabs from East Jerusalem earlier this week.

"I cannot help but to think of where we were 70 years ago in Europe," said Barkat referring to European anti-Semitism during the time of the Holocaust. "We cannot generalize as they did to to Jews. Here in Jerusalem, we have tens of thousands of Arab workers. We must make a clear distinction."

The Jerusalem mayor called for Jews to continue to employ Arab workers. As an example, Barkat cited the synagogue in Har Nof that was the cite of the terrorist attack that resulted in the deaths of four rabbis and one policeman.

"Even in the synagogue in Har Nof, they decided to continue to employ all of their Arab workers. The management of the Har Nof Synagogue was done with dignity and wisdom, not from excitement, which showed how we need to act."

Additionally, it was revealed on Friday that a sister of one of the terrorists from the synagogue attack works in the Jerusalem municipality.

Barkat said that the sister is a "valued" and "outstanding" employee working for more than ten years at the municipality."As long as she exceeds and is focused in her work, and brings real value to the residents of the city of Jerusalem, there is no reason to prevent her from doing her job."

Along with his words about the sister of one Jerusalem terrorist, Jerusalem's Mayor also said  Israel needs to be focused against the "bad people, to locate them, and with them to be very tough," which included for Barkat, the possibility to strip citizenship from the family members of terrorists.

Prime Minister Benjamin Netanyahu issued similar statements on Thursday, saying that Arab Israelis must not be discriminated against because of the violent actions of a small minority.

"We should not discriminate against an entire public because of a small minority that is violent and militant," he said. "The vast majority of Israeli-Arab citizens are law-abiding and we are acting resolutely against those who break the law," he added. Netanyahu said that the “Jewish state” bill that he will bring to the cabinet on Sunday will enshrine full equality under the law to all Israeli citizens without regard to race, religion or gender, as well as ensuring the identity of Israel as the national home of the Jewish people.

“There is no contradiction between the two things, and we will not allow the undermining of these two principles,” the prime minister said.

Herb Keinon contributed to this report