Shimoni also deployed a team of armed security guards at kindergartens close to building sites employing Arabs with funds provided by a private donor based abroad.
His decision to sack Arab workers caused outrage across the Israeli political spectrum amid charges of racism and signs of a wider purge of Arab workers by Jewish employers professing fears that their employees could carry out a future attack.
A chorus of criticism, initially led by left-wing opposition and Arab figures, was eventually joined by the country's leaders after legal experts said Shimoni's decision broke Israel's equal opportunity laws.
Prime Minister Benjamin Netanyahu said there was "no place for discrimination against Israeli-Arabs", adding: "We cannot make generalisations about an entire population based on a small unruly minority. Most Arab citizens of Israel are law-abiding."
Naftali Bennett, the far-right Jewish Home party leader, promised to use his powers as Economy Minister to reverse the mayor's decision.
"We are experiencing a difficult time, a wave of terror, but we know that 99.9 per cent of Arab-Israelis are loyal to Israel," he said.
The outcry followed a statement from Israel's Commission for Equal Employment Opportunities about "a not insignificant number of requests regarding employers firing or wishing to terminate the employment of Arab male and female employees, solely on racial grounds".
The trend follows months of unrest in mainly Arab East Jerusalem and a spate of attacks in which 11 people have died.
Arab-Israelis and Palestinians from East Jerusalem commonly work in the building trade and in restaurants in the city's Jewish western sector. Many have lost their jobs in recent weeks because of their Arab background, Yedioth Ahronoth newspaper reported.
One of the cousins who carried out this week's synagogue attack was reported by Israeli media to have worked in a nearby grocery store in the ultra-Orthodox Har Nof neighbourhood. In response, a reception hall chain based in the coastal town of Bnei Brak fired 17 Arab dishwashers, according to Yedioth.
"I'm tired of giving them a livelihood only to get an axe in return," it quoted the company's operations director as saying.
"They know how to work. But I've got no faith in them. I can't go on like this. It isn't only the momentary fear after a terror attack. It's more than that. Today it's Har Nof, tomorrow it's here."
Forces foil plot to kill minister
Israel's Shin Bet domestic security service says forces have caught a Hamas group in the West Bank planning to assassinate hawkish Foreign Minister Avigdor Lieberman.
It said three suspects in custody "collected advance intelligence on the minister's convoy" on its journeys to and from his home in the West Bank settlement of Nokdim and sought to procure an RPG launcher with which to target his vehicle.
A Shin Bet statement said Ibrahim el-Zir, Ziad el-Zir and Adnas Tzabih, all from the West Bank village of Harmala, near Nokdim, were arrested.
It said that during Israel's July-August war in Gaza Ibrahim el-Zir "began to formulate a plan to carry out an attack on the motorcade of Foreign Minister Avigdor Lieberman, with the intention that the attack would send a message to Israel and bring a stop to the war in Gaza".
It said that "in recent days" the suspects were charged in a West Bank military court with conspiracy to commit murder and conspiracy to traffic in weapons.
- AFP
