GAZA (Reuters) - Schools, clinics and food distribution centers in the Gaza Strip were closed most of Monday by a demonstration by thousands of employees of the United Nations agency that serves Palestinian refugees.

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Palestinians have been angered by a U.S. decision to cut aid to the United Nations Relief and Welfare Agency (UNRWA), saying it will cause worse hardship in Gaza. More than half the enclave’s two million residents depend on support from UNRWA and other humanitarian agencies.

Those joining Monday’s protest feared job losses among UNRWA’s 13,000 employees and cuts to services. They marched to the U.N. headquarters in Gaza City waving Palestinian flags and brandishing banners that read “Dignity is priceless”.

“I have a family of nine and I have never felt afraid for my job like today. U.S. aid cuts will affect the entire community,” said 59-year-old English teacher Ahmed Abu Suleiman.

UNRWA, which runs 278 schools in Gaza attended by some 300,000 students, has made an international appeal for funds.

“We don’t know how to pay for the food we are currently distributing,” said UNRWA’s Gaza director, Matthias Schmale, who accompanied the marchers. “My biggest worry at the moment is will I be able to distribute food in April at all.”

UNRWA is funded mainly by voluntary contributions from U.N. member states, with the United States by far the largest donor.

U.S. officials have demanded UNRWA make unspecified reforms. Washington said on Jan. 16 that it will hold back $65 million of a $125 million aid installment to the agency. UNRWA received $355 million from the United States in the 2017 fiscal year, which ended Sept. 30, U.S. officials say.

“We have received $60 million from the U.S. There is no certainty over whether they will give us any more,” UNRWA spokesman Chris Gunness said in an e-mail to Reuters.

The protest comes amid Palestinian anger over U.S. President Donald Trump’s Dec. 6 decision to recognize Jerusalem as Israel’s capital.

Speaking at the World Economic Forum in Davos last week, Trump criticized the Palestinian leadership for refusing to meet Vice President Mike Pence during his visit to the region and suggested such behavior provided grounds for cutting aid.

“When they disrespected us a week ago by not allowing our great vice president to see them, and we give them hundreds of millions of dollars in aid and support, tremendous numbers, numbers that nobody understands -- that money is on the table and that money is not going to them unless they sit down and negotiate peace,” Trump said.

UNRWA was established by the U.N. General Assembly in 1949 after hundreds of thousands of Palestinians fled or were expelled from their homes in the 1948 war that followed the creation of the state of Israel.

For a graphic on UNRWA funding, click reut.rs/2DxRkNW

(The story clarifies sum U.S. has given UNRWA, adds quotes from UNRWA officials.)